Some of the common terms you’ll hear around the property investing traps:
LMI – Lenders Mortgage Insurance. Generally required for loans over 80% of the purchase
price.
LVR – Loan to Value Ratio. This is the amount you are borrowing to the amount of the
property purchase.
Purchasing Costs:
- Legal Fees – Assistance with the property transaction
- Stamp Duty – Government taxes on purchasing property
- Pest & Building Reports – Checks to see if property viable
- Loan Costs – fees from the lender to set up the loan
- Buyers Agent fees – If you choose to go down this path, someone to source the
property on your behalf.
Land Tax Threshold – Australian State Governments allow individuals (and sometimes trusts
or companies) to own a certain amount of land within the state tax free. Once you have
acquired more than the threshold, taxes will need to be paid. Note – it is based on the land
value only (not the building & land price/value), which is often mentioned on your council
rates notice.
Equity – The difference between the current value and the amount of loan debt you have.
Property Expert – In my opinion this is someone that has skin in the game (I.e. they also invest their own money/equity in property investment) and who is also on the ground every day. Living and breathing the markets they are buying and advising in.
