Appraisal/valuation – 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.  Also known as 'owners corporation'.

Building approvals – a short term loan used 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.

Cashflow 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 if you have made a profit.

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

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 mortgage, not paying anything off the principal or amount owing.

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

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

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 but you do have to pay interest on the amount drawn.

Low-doc loans – 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.

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 of a property of $600 a month.  Your expenses are $900, so 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 effort 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.

PPR – principal place of residence.

POA – price on application.

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 and cash poor (usually PPR).  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 – 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 multiplying this figure by 100 to get the percentage.

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

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 – when a seller 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).