Property investment jargon explained

Be an informed investor and get to grips with the lingo!

Application fees

Fees charged to fully or partially cover the lender's internal costs of setting up a loan approval for a property buyer.


Appreciation refers to the increase in a property's value over time. Depreciation refers to a fall in the property's value.

Assessed Value

The value that a taxing authority like the Australian Taxation Office or your state or territory's Office of Land Tax places on a property for the purpose of taxation.

Basic variable loan

A loan at a reduced interest rate that usually has fewer features than a standard variable loan.

Capital gain

The profit made on the sale of your rental property.

Capital Gains Tax

Tax based on the difference between the purchase price (plus upfront costs) and selling price of an investment property.

Comparable Market Analysis (CMA)

A written analysis of houses having similar characteristics currently being offered for sale as well as comparable houses sold in the past six months. This enables you to determine if you are paying market value for a home, and to identify whether market prices are rising or falling.


The process of transferring property ownership in law.


Upon signing a contract to purchase a property, the purchaser is required to pay a deposit to secure the property - usually at least 10% of the purchase price. The deposit is normally held in trust by the vendor's (seller's) real estate agent.


The difference between the property's value and the balance of the loan used to fund it.

Equity loan

A loan obtained through equity is one secured by the proportion of the value of the property you own.


A legal process in which the landlord justifies in court why a tenant has to leave the property.

Fixed rate mortgage

A mortgage in which the interest rate and payments remain the same for the duration of the fixed term.

Loan to valuation ratio (LVR)

The amount of a loan as a proportion of the property’s value.

Negative gearing

This occurs when the costs of owning an investment property exceed the income it generates.


Costs incurred in generating rental income - typically rates, insurance, repairs and maintenance and property management fees.


A written commitment from a lender, subject to a property appraisal and other stated conditions, that lets you know exactly how much you can afford.


The amount borrowed.

Principal and interest (P&I)

A loan in which both principal and interest are repaid over the course of the loan term.

Residential Tenancies Tribunal

Specialist bodies that exist in most Australian states and territories to resolve disputes between landlords and residential tenants.


An asset offered by a borrower to a lender, which can be repossessed by the lender if the borrower fails to make loan repayments.


A report required by the lender, detailing a professional opinion of the property value.


The percentage return of a property calculated by dividing the gross (before expenses) or net (after expenses) rental income by the market value or price of the property.

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