Explore the world of property investment with our A-Z guide. We cover everything you need to know to make informed decisions and unlock the potential of property investment.
ASSETS - An asset is generally any useful thing or something that holds value. An investment property is an appreciating asset because of its land content.
BUILDING APPROVAL (BA) - A building approval (or building permit) is needed before construction can start on most types of domestic building work. You get a building approval from your local government or a building certifier.
CAPITAL GAINS TAX (CGT) - Capital gains tax is the tax you pay on profits from selling assets, such as property.
COOLING OFF PERIOD - A timeframe given to the purchaser to legally withdraw from buying a property. The length of time varies in each of the states and territories.
CONTRACT - A contract is an agreement made between 2 or more parties that is legally enforceable. Legally enforceable means if one of the parties breaks the contract, the other party can take legal action against them.
DEFECTS INSPECTION - A Handover or Defects Inspection is a building report for the buyer of a newly constructed home after all the building work has been completed.
DEVELOPMENT APPROVAL (DA) - Development Approval is a legal document that allows you to undertake a development. Development Approvals specify the design and other documents that the development must follow – i.e. plans for the location and design of the buildings and the structural details for the building such as the depth of footings.
DUE DILIGENCE - Due diligence refers to all of the searches and inspections that a buyer may undertake when purchasing a property. These searches may be on the property and on the land that the property sits on.
EQUITY - The difference between your mortgage and your property's value. If your home is worth $350,000 and you owe $150,000, then you have equity of $200,000.
EXTENSION OF TIME (EOT) - Extension of the contract period granted to a contractor to allow for delays to the works from causes over which the contractor has no control.
FINANCE CLAUSE - When a contract is subject to finance, it means that the sale is conditional upon the lender approving your home loan that you need to fund your purchase. This doesn’t mean that the contract definitely ends without finance approval - just that you have the ability to get out of it if you need to.
FREEHOLD - Freehold Property is essentially 'buying' a property completely. That is, you own the land and all immobile (non-moveable property such as the house, shed, swimming pool, etc, as opposed to mobile property such as cattle, etc).
GUARANTEE - This is something that a bank might ask for when someone (the “borrower”) wants to get a loan, usually a mortgage. If the borrower doesn't have enough income or cash funds for the bank to be satisfied that they can maintain the loan on their own, they may be asked to get someone else to guarantee the loan.
GUARANTOR - A person who undertakes to fulfill a contract if the main party defaults.
HANDOVER - When the property reaches practical completion or is ready for handover. It is when all the building work is done, defect inspection is completed, and the property owner receives the keys.
INSURANCE - This is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to protect against the risk of a contingent or uncertain loss.
INTEREST RATE - Is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum).
INVESTOR - Someone who buys a property that will typically be rented out to someone else for a return.
JOINT LIABILITY - Means that more than one person is responsible legally to pay back a loan, cover damages, or otherwise satisfy a liability.
Stay tuned for next week when we bring you A-Z of Property Investment Part 2.
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