Glossary

Glossary of Home Loan TermsHome Loans Australia glossary of mortgage terms

Important real estate terms can sometimes be difficult to interpret. The Real Estate Institute of Australia (REIV) provides a comprehensive list of industry vocabulary on their  HYPERLINK “http://www.reiv.com.au/” \t “_blank” website. Below are some of the more popular terms and their definitions.

APPRAISAL/ VALUATION

The term commonly used in America to indicate what is termed in Australia as a Valuation. In Australia, the term means an opinion of the potential saleability of a residential property by a licensed Real Estate Agent.

MEDIAN VALUE

Is the middle price in a series of sales where half the sales are of lower value and half are of a higher value. For example, if 15 sales are recorded in a suburb and arranged in order from lowest to highest value, the eighth-placed is the median priceMedians are used rather than average prices because they are unaffected by a few unusually high or low prices, making them a more accurate indicator of true market activity.

CHATTELS

Any fixed asset other than freehold land. Items such as machinery, implements, tools, furnishings, fittings, which may be associated with land use, but which are not fixed to the land or premises or, if fixed, may be removed without causing structural damage to a building. Legally known as personality.

EASEMENT

A right to use the land of another (not involving the taking of any part of the natural produce of that land, or any part of its soil) or a right to prevent the owner of that land from using that land in a particular manner. Most commonly used where Government authorities have the right to run, for example, electrical mains or drainage through private property. Some form of compensation may be payable.

LENDERS MORTGAGE INSURANCE (LMI)

Is a percentage of the borrowed amount. Many lender websites have LMI calculators that can provide buyers with a basic figure.

Many people ask why they must pay the insurance when it’s the lender that is being insured. But, while the benefits may be initially more apparent from the lender’s perspective, both parties benefit in one way or another. For example, a couple may have a sufficient joint income to easily cover their mortgage repayments on their dream home, but may not have a large enough deposit to qualify for a home loan under their own steam. However, depending on the size of their deposit, they may still qualify for a home loan thanks toLMI. In most cases, the only way to avoid paying an LMI premium is to wait until you have a deposit of 20% or more before looking for a loan. Although this will save you having to pay LMI this approach may also mean missing out on the perfect property or the right time to enter the home loan market. Most informed borrowers, therefore, view lenders mortgage insurance as an unwanted but necessary cost.