Glossary

Application Form (rental property)

An Application Form lets the potential tenant provide key information about them to the property manager or landlord that shows the agent that they are the best candidate for the property, are able to pay the rent on time, and will look after the property as specified in the Residential Tenancy Agreement. It is used by the property manager to identify who they will recommend to the landlord to rent the property.

Ballot

A method of sale where eligible applicants provide their details to go into a draw. Names are then drawn out via an electronic ballot draw system. Prospective buyers are then invited to purchase an affordable home in the order the names were drawn. This process ensures buyer names are provided in random order.

Building insurance

Building insurance helps to cover the cost of replacing a home if it’s destroyed, or the cost of repairing damage to the physical structures of a property. 

Building insurance usually covers permanent fixtures and fittings such as inbuilt kitchens, garages/sheds and fences from events such as fire, flooding (specific causes), storm, impact (e.g. from a car accident or falling tree), explosion, riot, vandalism and earthquake. 

More comprehensive building insurance policies may extend to cover the property owner for legal liability (compensatory costs in the event that someone is injured while on the property), emergency repairs, counselling services, clean up fees, temporary accommodation, building modifications and funeral expenses. 

Certificate of Title

A Certificate of Title is a legal document which identifies the owner and any encumbrances or easements associated with a particular parcel of land. Each time ownership of a property changes, the Certificate of Title is amended to reflect new ownership. 

New residential properties in South Australia are usually Torrens titled or Community titled. The main difference between the two is that Community titled properties have common areas (such as shared driveways, gardens or lifts) which are owners are required to financially contribute towards through a community corporation and follow by-laws.

Certified Copy

A certified copy (often a photocopy) of an original document that has on it an endorsement or certification that it is a true copy of the original document. It does not certify that the original document is genuine, only that it is a true copy.

Comparison rate

A comparison rate is designed to help you understand the overall cost of a home loan, including fees and charges from the lender.

For example, a 3.50% interest rate at Lender A with high fees has a comparison rate of 3.85%. Lender B’s higher interest rate of 3.65% with lower fees has a comparison rate of 3.75%. This means Lender B is the cheaper option even though the interest rate is higher.

It is important to bear in mind that the comparison rate will be based upon a standard set of criteria which might not align with your circumstances.

Conditional Approval

Conditional approval, or pre-approval, means the lender has assessed you and your suitability as a borrower and is happy to loan to you, subject to completing their verification process. This is conditional on the bank’s assessment that the property you select is suitable and verification of the information in your application. Full approval combines the bank’s assessment and verification of you and your property.

Contents insurance

Contents insurance helps to cover the cost of replacing the things that you own that normally are inside of your house if they are damaged, stolen, or lost. This can include electrical items, furniture, clothes, sporting equipment and jewellery. 

If you are a homeowner you may combine your building and contents insurance into one, known as home and contents insurance.

Conveyancer

A licensed person professional who specialises in providing advice and information about buying and selling property including the transfer of Titles, ensuring that their client meets all legal obligations, and that the client’s rights are protected.

Conveyancing fee

Conveyancing charges cover the transfer of property’s title from the vendor (seller) to you. Conveyancing charges are usually estimated by the conveyancer and can range between $500 and $2,000. 

Cooling-off Period

The cooling-off period is the final stage of buying a home in which you can withdraw from the purchase of the property without legal or significant financial implications, even after signing the contract. Cooling-off periods are usually only available to buyers (not sellers) and are designed to protect them in case last minute issues arise. Reasons for withdrawing may include:

• not being granted finance approval by your lender
• an unsatisfactory building inspection report
• a change in personal finance (e.g. unemployment)
• you become aware of local development that will impact the liveability or value of the property negatively
• a property you'd prefer to buy becomes available.

Cooling off periods don't apply to property purchase made by auction.

Declaration of Eligibility

A Declaration of Eligibility is a Statutory Declaration that a Eligible Buyer signs to confirm that they meet the eligibility criteria to purchase a property under HomeSeeker SA.

The Declaration of Eligibility is supplied to the home buyer by the real estate agent. The home buyer has three working days to complete the Declaration of Eligibility, have it witnessed, and return to the Agent to secure they property that they wish to buy.

Deposit

A sum of money paid as an assurance the buyer is serious about the purchase. This amount is included as part of your payment towards the overall property price, but is paid at the exchange of contracts. It is often non-refundable.

Development Approval

Approval by the planning authority for a development. The planning trust could be local government or state government, depending on the project.

Eligible Buyer

An Eligible Buyer through HomeSeeker SA means someone who meets the eligibility criteria as outlined on the HomeSeeker SA website.

Employment reference / proof of income

An employment reference is usually a written statement by an employer outlining the salary, period of employment, and likelihood of employment to continue. Applicants can also submit payslips as proof of income, however, this does not state if employment is ongoing.

Exclusive listing period

A period of time during which a property is available for sale only to eligible buyers under HomeSeeker SA. During this time it can not be sold to an investor or someone who is not eligible for HomeSeeker SA.

First-in-line

Buying through HomeSeeker SA involves a ‘first-in-line’ process. 

To be in line to purchase a property you need to provide the real estate agent with proof of finance pre-approval so they can add you to the list of interested buyers (in order of contacting the agent). 

The agent will send a Declaration of Eligibility to the first person on the list who registers their interest in a property, and they have five days to complete the declaration and return it. If it is not returned within five days, the agent will contact the next person on the list of interested buyers.

This typically means that the most desirable properties in sought-after locations will be in high demand and sell quickly. It is not unusual for properties to secure a first-in-line buyer within minutes of being listed on the HomeSeeker SA website.

To be first in line to register interest in a property we recommend you:

• sign up to HomeSeeker SA, save your favourite searches and opt in to receive an email soon after new properties that meet your saved search criteria are listed
• keep your borrowing information up-to-date, including a current and valid finance pre-approval letter from your lender. 

Guarantor

A guarantor on a home loan (typically a parent or family member) is someone who provides a guarantee to a lender that they will be responsible for repaying the entire loan if the borrower can’t pay it back. The benefit for a borrower is that it may increase the amount they can borrow or prevent the borrower from needing to pay lenders mortgage insurance, however there are risks for the guarantor.

It’s important for guarantors and borrowers to understand their obligations before entering into a guarantor arrangement. If a borrower can’t repay the loan, then it could impact a guarantor’s credit and borrowing capacity or lead to repossession of the guarantor’s assets, and eventually cause family or relationship problems.

HomeStart

HomeStart is finance institution, established in 1989 by the Government of South Australia, that specialises in providing home loans for South Australians and getting people into home ownership.

Interest Rates

When you borrow money for a home loan, lenders charge interest on top of the amount of money you have borrowed (the principal). The interest rate, which is usually quoted as an annual percentage of the loan amount, determines how much money you will need to pay back on your loan.

Interest rates for home loans can either be variable or fixed. Variable interest rates can rise and fall as determined by your lender, while fixed interest rates are locked in for a set period.

Landlord

A landlord is the owner of the property that is being rented or is available to rent. 

Lands Title Office fees

The Land Title Office (LTO) collects a fee for registering the lenders mortgage on the title record for the property.

Lease

A lease is the common term for a Residential Tenancy Agreement.

A lease is normally in writing and signed by both the tenant and the property manager or landlord. All tenancy agreements are legal contracts, including verbal agreements. The lease states the terms of the agreement such as how long the tenancy is for, what is the agreed weekly rent and when it is to be paid.  It also states both the landlord’s and the tenant’s obligations in relation to maintaining the property and who is responsible for any costs relating to damage.

Lender

A lender is normally a bank, financial institution, community association or government that makes funds available to a person to purchase a home with the expectation that the funds will be repaid. Repayment normally includes the payment of any interest or fees.

LMI (Lenders Mortgage Insurance)

Lenders Mortgage Insurance (LMI) protects the lender if you can't make the loan repayments and the lender can't recover the loan balance. 

Keep in mind that an LMI insurer who pays the lender under an LMI policy can then come to you, the borrower, to repay the sum directly to it. LMI protects the lender, not you or a guarantor. 

If your loan to value ratio is above 80%, you usually have to pay a once-off fee to cover the cost of LMI for your lender. You can pay this fee on settlement or add it to the loan. If you add the LMI fee to your loan, interest will be charged when you repay it.

Loan establishment fee

Establishment or application fees are typically charged by the lender to cover the cost of documentation of the new mortgage. This is a one-off payment of around $200-$700 (depending on the loan), though many lenders waive establishment fees on particular products or for special promotions. Depending on the product, the lender might also charge annual fees and monthly service fees.

Loan to value ratio

The bigger your deposit, the lower your loan to value ratio (LVR). Your LVR is the amount of the loan divided by the purchase price (or appraised value) of the property. For example, if you're buying a house valued at $400,000 and you have a $300,000 loan, your LVR would be 75%.

Official cash rate

Official cash rate (OCR) is the rate of interest that the Reserve Bank of Australia (RBA) charges on its overnight loans and advances to commercial banks (e.g. Commonwealth Bank, Westpac, ANZ). OCR influences the cost of borrowing money and allows the Reserve Bank to influence the level of economic activity and inflation. When OCR decreases, home loan interest rates will often drop too, although various factors may impact interest rates.

Open Inspection

An open inspection is a specific time and date for potential buyers or renters to inspect and walk through a property.  The date and time is set by the real estate agent or property manager and advertised publicly, normally on the property listing.

An open inspection gives interested buyers or renters an opportunity to see the property firsthand and speak with the real estate agent / property manager prior to entering into a contract.

Personal references

A personal reference is a letter or statement that vouches for a rental applicant to meet commitments involved in renting a property such as paying rent on time, taking care of property, and meeting obligations as set out in a Residential Tenancy Agreement.  The purpose of a reference is to provide the property manager or landlord with information so that they can decide the best applicant to look after their property.

Pre-approval (finance)

Pre-approval is a lender's indication they may be willing to lend you a certain amount of money. Pre-approval is usually subject to certain conditions being met and can also be called conditional approval.

Private Rental Assistance

The Private Rental Assistance Program is run by the Government of South Australia and provides financial assistance to eligible customers who either have difficulty meeting the upfront costs associated with renting privately or need help to maintain their home. 

There are two types of assistance, bond guarantees and a rent assistance grant. 

Property Condition Report

A property condition report (or ingoing inspection report) is a document given to the tenant at the commencement of the tenancy that records the general state of repair and condition of the rental property on a room-by-room basis, including fittings and fixtures.

The tenant must receive two copies of the report, one for them to complete and return to the property manager or landlord, and one to keep for their own records. Legislation allows tenants 14 days to check the details on the condition report, and to confirm or disagree with those details. 

The condition report is used at the end of the tenancy to identify any damage caused during the lease and can be used as evidence if there is a dispute about who should pay for cleaning, damage or replacement of missing items. 

Property inspection fee

If you are getting serious about buying a property and want to be certain the building is in an acceptable condition, there are reputable companies that offer pest and building inspections for around $300 to $500. An online search for ‘pre-purchase building inspection’ will present you some options.

Property Manager

A property manager is engaged by the landlord to manage the day to day running of their property. They ensure both the tenant and the landlord are upholding their obligations as set out in Residential Tenancy Agreement (between the tenant and the landlord) and Management Agreement (between the landlord and the property manager). A property manager must work within the current legislation as stated in the Residential Tenancy Act of SA 1995.

Rental bond

A rental bond (also known as a residential bond) is an upfront payment made by the tenant before moving into a rental property. The landlord must lodge it with Consumer and Business Services (a receipt is given to the tenant), and, at the end of the lease, it is returned to the tenant if there are no claims for outstanding rent, damage, cleaning, or other costs.

How much bond will I need to pay?

Rental profile

A rental profile allows you to store all of your tenant data in one place to share electronically with property managers and landlords instead of having to supply it every time you apply for a rental property. Different real estate agents and property managers use different types of rental profiles. The most commonly used is 1form, as used on realestate.com.au, and by agencies such as L J Hooker, Harcourts, First National and Raine & Horne. Sign up for 1form.

Rental reference

A rental reference is a written declaration from previous landlord/s stating the rental history of a particular person from the landlord’s point of view.  This will normally include what they know about the person, whether rent was paid on time, and what to expect of the person as a tenant. The landlord uses this information to identify which applicant will maintain their property in line with the tenancy agreement.

Residential Tenancy Agreement

Also known as a lease, a Residential Tenancy Agreement is normally in writing and signed by both the tenant and the property manager (or landlord).

All tenancy agreements are legal contracts, including verbal agreements. The agreement states the terms such as how long the tenancy is for, what is the agreed weekly rent and when it is to be paid.  It also states both the landlord’s and the tenant’s obligations in relation to maintaining the property and who is responsible for any costs relating to damage.

Rooming house

A rooming house is a residential property managed by a proprietor (landlord) who makes accommodation available to residents (tenants) on a room-by-room basis. Rooms are available to rent to at least three other people. The sa.gov.au website explains rooming house accommodation in more detail.

Routine inspection - rental

The Landlord or Property Manager may carry out a periodic inspection of a rental property to ensure it is being maintained in a clean and tidy manner, there is no malicious damage, and the tenant is upholding their obligations as stated on the Residential Tenancy Agreement. 

This also gives both the tenant and property manager the opportunity to identify any maintenance that is required. The inspection is usually documented so that it can be referred to at a later date.  The tenant can request for the property manager to provide them with a copy of each routine inspection for their own records.

Settlement

Settlement is the process of taking legal possession of the property (i.e. receiving the keys). There are some legal and administrative tasks that must be completed on settlement day which are typically undertaken by your conveyancer.

Shared Equity

A shared equity arrangement is when a third party (most likely the lender or the government) takes out a stake in your home at the time you buy it. This will can help to bring your overall loan (and loan repayments) down.

For example, if you purchase a $400,000 home with 25% shared equity, you will only make repayments on a $300,000 loan (minus any deposit you paid up front). Keep in mind that you are still required to pay 100% of the deposit, stamp duty (if applicable), council fees and any other costs associated with the home.

When it comes to selling your home, your equity partner (the lender) receives their share back plus a share of any increase in capital value (if the property has risen in value).

Stamp Duty

Stamp duty is a government charge on certain transactions, including real estate. It is charged at either a flat rate or a rate based on the price of the property (i.e. the higher the price the higher the stamp duty).

Refer to RevenueSA for more information that can assist to estimate the amount of stamp duty payable on a property.

Valuation

A bank valuation is a conservative estimate of the value of the property you are planning to buy. It allows the bank to determine if they could recover the losses associated with the loan, should you be unable to make your repayments. 

Lenders can sometimes charge to cover the cost of having your property valued by a third party. The fee can vary depending on the location of the property but typically costs between $100 and $300. Some lenders offer a free valuation. 

A printable brochure containing advice from Consumer and Business Services (CBS) about buying or selling a home is available from the CBS website. 

Vendor

In real estate language, the seller of a property is commonly known as the vendor.