Acceptance - the consent of the person receiving an offer to be bound by the terms and conditions of the person making the offer. Acceptance of an offer constitutes an agreement.

Appraisals/valuations – a written report of the estimated value of a property, usually prepared by a valuer.

Body corporate – an administrative body made up of all the owners within a group of units or apartments of a strata building. The owners elect a committee which handles administration and upkeep of the site.

Bridging finance – a short-term loan used to bridge the gap between buying a new property and selling an existing one.

Building approvals – the number of dwellings approved to be constructed in a given month, quarter or year.

Capital gain – the amount by which your property has increased relative to what you paid for it. Simplistically, if you bought a property for $200,000 and it’s now worth $350,000, you’ve made a capital gain of $150,000.

Cash rate/bank rate – the cash rate is the rate at which the Reserve Bank of Australia or New Zealand sets interest rates. The bank rate is the interest rate that banks offer and is above the cash rate to allow for a profit margin.

Cash-flow positive – you have a cash-flow positive investment if the incomings are more than your outgoings after tax-deductible items have been claimed. You receive more rent than your mortgage repayments, plus you are still ahead after taking into account items such as interest on the loan, maintenance, insurance, land tax, rates, etc.

CGT (capital gains tax) – this is the tax you pay when you sell an investment property in Australia and if you have made a profit. There is no CGT in New Zealand.

Cooling-off period – a period of time given to the purchaser of Australian property to legally withdraw from buying a property. The length of time varies in each of the States and Territories.

Cross-securitisation/cross-collaterisation – when the financial institution uses your property (whether owner-occupied or investment) as security for other property you purchase.

Density – the level of occupancy in a given area, or the number of people permitted to reside in an area. For example, inner-city areas are usually higher density than outer-suburban areas.

Equity – the difference between your mortgage and your property’s value. If your home is worth $400,000 and you owe $150,000, then you have equity of $250,000.

Fixed rates – where the home loan is locked in at a specific interest rate for a specified term, usually one to five years.

Interest-only – only repaying the interest charged on your mortgage, not paying anything off the principal or amount owing.

Joint tenants – each owner has equal shares and rights in the property.

LIM Report (New Zealand Land Information Memorandum) A LIM is a report prepared by the local New Zealand Council at your request. It provides a summary of property information held by the Council as at the day the LIM was produced.

A LIM provides some or all of the following:

• Information on special land features or characteristics, including potential erosion, avulsion (removal of land by water action), falling debris, subsidence, slippage, alluvion (the deposition of silt from flooding), inundation (flooding), presence of hazardous contaminants which are likely to be relevant to land and is known to the local Council. 
• Information on private and public stormwater and sewerage drains as shown in Council records. 
• Information relating to any rates owing in relation to the land. 
• Details of approved building, plumbing/drainage and resource planning permits and consents indicating where further action is required. 
• As required by the Building Act 1991 details are included of: 

Code Compliance Certificates: a final certificate of approval for building consents 
Compliance Schedule: required for certain systems or features of commercial and multi-residential properties 
Warrant /Statement of Fitness: in conjunction with compliance schedule -issued annually to maintain compliance standard 
Details of Dangerous Goods, Liquor, Hairdressing and Health Licences (mainly refers to commercial properties). 

• Details of operative and proposed zoning, road widening, height restrictions, view and tree protection, and any Historic Places Trust listing. 
• Any outstanding requisitions or notifications from the local council regarding any matters on that property that do not meet council specifications and which require action within a certain time frame. Satisfying requisitions is the responsibility of the owner of the property. 
• The Memorandum may also include such other information concerning the land which the local council considers, at its discretion, to be relevant.

LMI (lenders mortgage insurance) – usually required by lenders in when you’re borrowing more than 80 per cent of the property’s value. It provides insurance to the lender in case the borrower defaults on the loan.

LOC (line of credit) – a facility available from financial institutions that gives you a credit limit that you can draw down at any time. It’s similar to a credit card, except you don’t have to make repayments.

Low-doc loans – relatively new, these are loans that don’t require as much documentation to set up the loan. They are popular with self-employed people and those who have not yet established a credit rating.

Lower quartile – the price point below which 25 per cent of sales were recorded. If there were 100 sales in a suburb, the 25th lowest price would be the lower quartile price.

LVR (loan to value) ratio – to calculate it, divide the loan amount by the value of the property then multiply by 100 to get a percentage. Banks and financial institutions use this as a measure of whether you can afford the loan.

Median – the median house price is the middle price of all sales recorded in a particular suburb, postcode, city or State. For example, if there were 100 sales in a particular suburb, in ascending order, the median would be number 50 on the list. It’s commonly assumed that the median price is the same as the average price, but that’s not the case. To calculate the average, you would add up the 100 sales and divide the total by 100 (the number of sales).

Negatively geared – this is where the incomings are less than your outgoings after all tax deductions have been claimed. For example, you receive rent on a property of $600 a month, but your mortgage repayments are $900 a month. Your shortfall is $300 a month, which you can claim as a loss when doing your tax return. Many people on high incomes use negative gearing to reduce their taxable income.

O&A (offer and acceptance) form – when you make an offer to purchase a property, you sign one of these forms. When the owner accepts the offer, it becomes a binding contract.

Off the plan – when you buy off the plan, you are buying a property before it is built, having only seen the plans. This is commonly used for apartments or units under construction or about to be built.

Passed in – when the highest bid at an auction doesn’t meet the reserve price set on the property. In effect the property doesn’t sell at the auction.

Portfolio (as in property portfolio) – the number and type of investment properties you own.

Positively geared – this occurs when the investment income exceeds your interest expense (and other possible deductions). For example, the rent you receive may be $1000 a month, but the monthly repayments are only $750. Note that you may be subject to additional tax on any income derived from a positively geared investment.

PPOR or PPR – principal place of residence in Australia.

POA – price on application. You may see this in a real-estate advertisement.

Principal and interest – the amount borrowed or still to be repaid, plus the interest on the mortgage. The principal is part of the repayment that reduces the balance of the mortgage.

Property cycle – property values usually follow a cycle of growth, a slowdown, a bust and an upturn. History shows that this occurs every seven to ten years.

Reverse mortgage – designed for seniors who are asset-rich (usually with their PPOR) but cash-poor. The facility allows them to access the equity in their homes without having to sell it. Most often the loan is not paid out until the borrower dies, moves into a nursing home or relocates.

Rental yields (and calculations) – the return on an investment as a percentage of the amount invested. Gross rental yield can be calculated by multiplying the weekly rent by 52 (weeks in a year), then dividing by the value of the property and multiply this figure by 100 to get the percentage.

Reserve price – the minimum amount a seller will accept at an auction.

Sold under the hammer – this means a property that goes to auction sells at the auction.

Serviceability – whether you can manage your mortgage payments, based on your income and expenses.

Supply and demand – the number of properties on the market at any given time determines the supply-and-demand equation. If there are lots of properties on the market, it’s a buyers’ market. If there are few properties on the market or those that come on to the market sell quickly, then it’s a sellers’ market.

Tenants in common – two or more buyers own a property with unequal shares and rights.

Upper quartile – the price point below which 75 per cent of sales were recorded. If there were 100 sales in a suburb, the 25th highest price would be the upper-quartile price.

Vacancy rates – a measure of how many dwellings are available for rent over a specified time period. A low vacancy rate means there are not very many dwellings available for rent, while a high vacancy rate means there is ample supply of rental properties.

Vendor’s terms – refers to instances when a property owner is prepared to offer a buyer finance or other assistance such as staged payments to assist with the purchase of the property (also known as “wrapping”).