Becoming an expert investor.

Whether property investment is a hobby or a financial necessity, every new Accrue member will have lots of questions. The knowledge centre is your guide to becoming an expert investor.

Happy Couple


Becoming an expert investor.

Whether property investment is a hobby or a financial necessity, every new Accrue member will have lots of questions. The knowledge centre is your guide to becoming an expert investor.

Happy Couple
Happy Couple


Becoming an expert investor.

Whether property investment is a hobby or a financial necessity, every new Accrue member will have lots of questions. The knowledge centre is your guide to becoming an expert investor.

Glossary of terms

Appreciation – The increase in the value of a property over time.

Amortisation period – The number of years it will take to fully pay off a home loan.

AAPR – This stands for the Average Annual Percentage Rate taking into account honeymoon rates, ongoing fees, introductory offers and discharge fees as well as the advertised interest rate.

Amortisation period – Also known as the loan term. It’s the agreed length of time that a borrower has to repay a loan. It’s set during the application and approval process.

Application fees – The fees a lender charges to set up the loan. It’s generally to cover the lender’s internal costs.

Appraised value – The estimated value of a property being used as security for a loan.

Basic Variable – A variable home loan at a lower rate and with fewer features than a standard variable home loan.

Bank valuation – A bank’s estimate of a property’s value. This is often more conservative than the actual market value.

Beneficiary – The person receiving the income from the trust, deed of trust or estate.

Bridging finance – A short-term loan used to allow a buyer to purchase a new property if the proceeds of a property he or she recently sold have not cleared.

Caveat – A notification on the title declaring a party other than the owner may have an interest in the property.

Caveat Emptor – Latin for ‘buyer beware’. In a property transaction, the purchaser carries the risk. In other words, do your homework.

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

CGT – Capital gains tax. In real estate terms, this is a tax levied on profit from the sale of an investment property (not the family home).

Depreciation – A reduction in the value of an asset over time.

Equity – The value an owner of a property has in the asset above the debt owed.

Interest – The amount paid by a borrower to a lender in addition to the main amount borrowed (the “principal”). The interest rate can be fixed, variable or a combination of the two (“split loan”).

Interest Loan Only – When only the interest is repaid during the term of a loan. The principal is repaid after the loan term expires.

Land Tax – A state tax based on the value of the property, paid by the owner but doesn’t include the principal place of residence.

LMI – Lenders mortgage insurance. Often payable when a borrower doesn’t have a big deposit, it’s designed to protect the lender against default.

LVR – Loan-to-value ratio: the proportion of money borrowed versus the value of a property. When the LVR is high (over 80 per cent, for example), a lender is more likely to charge lenders mortgage insurance.

Mortgage Protection Insurance – An insurance policy which covers a borrower’s mortgage repayments in the event of illness or injury.

Mortgagee – The lender.

Mortgagor – The borrower.

Offset Account – In a mortgage offset account or home loan offset account, the credit in the account is offset daily against the home loan balance, reducing the interest charged accordingly.

Stamp Duty – Tax levied on a contract, calculated as a percentage of the contract value. Varies between states and territories.

Trust Account – A bank account managed by a real estate where funds (such as deposits and rental income) are held on behalf of someone else.

Appreciation – An increase in the value of a property

Capital gains – The profit on the sale of capital asset, such as a house.

Consumer Price Index (CPI) – An index measuring the prices at various times of a selected group of goods and services which typify those bought by ordinary Australian households.  It allows comparisons of the relative cost of living over time, and is used as a measure of inflation.

Diversification – The spreading of investment funds among classes of securities and localities in order to distribute and control risk. This is a fundamental law of investing, meaning simply: Don’t put all your eggs in one basket.

Negative gearing – When the earnings from an investment property are – in the short-term, at least – less than the costs associated with the investment. The shortfall can be used to reduce tax liability in Australia, for now.

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.

Median Price – the median house price is the middle price of all sales recorded in a particular suburb, postcode, city or state. 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) and the number could be quite different to the medium.

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

Yield – The annual rental income of an investment property, expressed as a proportion of the property’s value.

Asking Price – The price of a property that a owner may be willing to negotiate at.

Assignment – The transfer of property from one person to another.

Auction – The selling of any property in public by a licensed auctioneer endeavouring to persuade buyers to make offers until it is knocked down to the highest bidder.

Body Corporate – The administrative body made up of the registered proprietors of the units that handle administration and upkeep of the property.

Building inspection – An inspection generally carried out prior to the purchase of a property to ensure the building is structurally sound. Contracts of sale can be made subject to the satisfactory building inspection.

Building regulations – Legal or statutory rules set up by a local council to control the manner and quality of buildings in it’s jurisdiction. The rules are generally designed to ensure public health and safety as well as acceptable standards of construction.

Counter Offer – A new offer, made after a previous offer has been rejected by the owner.

Cooling Off Period – Refers to the time during which a buyer can terminate the contract. This differs from state to state and in Western Australia there is no cooling off period at all. It was introduced to allow buyers to quickly make an offer and secure the property before seeking legal advice, financial approval or undertaking a professional property inspection.

Conveyance – The transfer of property ownership and changing the title of a property from the seller’s name to the buyer’s name.

Fittings – Items in a home that can be taken out without damaging the items or the space in which they were located. Includes washing machines, refrigerators and other items not usually included in a property sale.

Fixtures – Items fixed to a property in a way that would damage the item or the structure of the property if they were to be removed, such as built-in shelving or carpets. Usually included in the sale of a property.

Off the Plan – Purchasing a property before completion and from a plan.

Offer – The price conveyed by one party to another to form a contract.

Private Sale – The owner selling the property without an estate agent.

Private Treaty Sale – The owner selling the property utilising the services of an estate agent.

Reserve price – The lowest price a vendor has agreed to accept.

Settlement date – The date on which a property sale is finalised. The purchaser pays the vendor and gains possession of the home at this time.

Title – The type of property ownership, for example Torrens title, strata title or company title.

Zoning – An urban planning tool used by local governments to determined how land is to be used. Examples include low density residential, high density residential, mixed use and metropolitan centre.

Break costs – Penalty charges for ‘breaking’ or ending a fixed term loan before the agreed date.

Covenant – Restrictions placed on the title; these invariably can affect future plans with the property.

Commission – The fee or payment made to a real estate agent for services.

Exchange of Contracts – The legal process that creates a binding agreement for the sale of a property. A deposit is usually paid at this time, and may be forfeited if either party backs out of the agreement.

Exclusive Listing – When a vendor has signed an agreement to make an agent solely responsible for the sale of a property during a specified period. If another agent sells the property during that time, the original agent is entitled to any commission.

Guarantor – Someone who agrees to fulfil a contract if the main party to the loan defaults.

Reverse mortgage – A type of mortgage, usually used by older homeowners, where repayments don’t need to be made until after the property is sold, or the last homeowner dies.

Power of Attorney – The person who has the capacity or authority of another party to act on their behalf.

Strata Title – A title used for units and townhouses.  It gives the owner ownership of a defined part of the building including air space as well as membership to the owners’ corporation.

Stratum Title – Different to a strata title in that the owner purchases a shareholding in the company that manages the common area.  Lenders sometimes can be reluctant to lend more than 80% of the property value.

Transfer – Document registered at the Land Titles Office recording entries of change of ownership.

Trustee – Legal term referring to the holder of property on behalf of another.

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

Final Inspection Report – A certification issued by a local council or building inspector that building works for a home are complete and the home is ready to be lived in.

Right of Way – A person may have a right to cross your property to gain access to his/her own property or there may be a public pathway across the land.

Square – An old imperial unit of area measurement. 1 square = 10 feet x 10 feet in area, which in metric measure is equivalent to 9.29m2.

Strata Title – System of land title based on the horizontal sub-division of air space whereby all the owners combined own the land, but have absolute right to sell / transfer their strata-titled property to a new owner. The most common form of strata title is a home unit.

Subdivision – A parcel of land divided into individual lots.

Urban Renewal – The process of rehabilitating urban (city) areas, by demolishing, remodelling or repairing existing structures and buildings, public buildings, parks, roadways and individual areas on cleared sites in accordance with a more or less comprehensive plan.


Want to know more about Property Investment?


Want to know more about Property Investment?