Dealing with official documentation can most times be baffling and the words used cannot be found in a regular dictionary. It is no different with all the paperwork needed when buying or selling a house. Translating and understanding some of the words and phrases might require a superhuman mind.
A few Real Estate Terms that baffles the most:
- Amortisation Period; indicates the number of years that will be needed to make full payment on a home loan.
- Caveat emptor; is taken from Latin and means, “buyer beware”, which means that you should make sure of all facts regarding the sale. The purchaser carries all risks in a property transaction.
- CGT; in short for Capital Gains Tax. This is Real Estate terms for a tax that is levied on profits gained from the sale of a property; (not that of a family home) but investment properties.
- Disbursements; are costs for services rendered by a real estate agent, for instance, advertising costs and photography, which can be claimed from the client.
- Equity; is the value of a property that is more than the debt owed, that is then the asset the owner will have when selling the property.
- Exchange of contracts; will make the process of selling or buying a property, legal, and a binding agreement. At this point, a deposit is usually paid but can be forfeited if any of the two parties should back out of the said agreement.
- LMI; Lenders Mortgage Insurance is designed to protect the lender if the borrower should default on payments. This is often payable if the borrower did not have a big deposit.
- LVR; Loan-to-Value ratio indicates the proportion between the values of a property against the money borrowed. If the LVR is higher than 80%, the lender will likely be charged to pay mortgage insurance.
- Mortgage Protection Insurance; is an insurance policy that will cover the borrower’s payments on the mortgage if something should happen, for example, in the event of injury or illness.
- Reverse Mortgage; is usually when the homeowners are older. It means that repayments will not need to be done until the property is sold or when the homeowner dies.
These terms are only a few of the many that can make reading and understanding legal documents a nightmare. Many words are derived from Latin, a language that is unfamiliar to most.