Welcome to TMAP‘s Christmas Countdown! Each day, we’re sharing property lingo, insights, tips, and tools to help you start 2025 on the right foot—perfect for first-home buyers and seasoned investors alike.

Getting into property investment can feel overwhelming, especially with all the new lingo that gets thrown around. For anyone looking to buy a first home or expand their property portfolio, understanding key terms is a great place to start. Here’s a guide to 12 essential property investment terms and lingo that will help you get a solid foundation as you plan for 2025.

1. Equity

Equity is the difference between your property’s current market value and the amount you still owe on your mortgage. As you pay down your loan, and if your property’s value increases, your equity grows. Investors can often use this equity to finance the purchase of another property.

2. LVR (Loan-to-Value Ratio)

LVR represents the percentage of a property’s value that you’re borrowing. For example, if you’re buying a $500,000 property and you have a $100,000 deposit, you’ll need a $400,000 loan, making your LVR 80%. LVR is important because it affects your borrowing power and any Lender’s Mortgage Insurance (LMI) costs you might have to pay.

3. Offset Account

An offset account is a savings or transaction account linked to your mortgage. The balance in this account reduces the amount of interest you pay on your loan. For example, if you have a $300,000 loan and $20,000 in your offset account, you only pay interest on $280,000.

4. Capital Growth

Capital growth is the increase in your property’s value over time. Property investors usually aim for capital growth because it helps increase their equity. Researching areas with a history of price increases can be a good starting point for finding properties with potential for growth.

5. Negative Gearing

Negative gearing happens when the costs of owning a property (like loan repayments, maintenance, and insurance) are more than the income it generates through rent. Although you might make a loss on a negatively geared property, Australian tax law allows you to claim deductions on this loss, which can make it an attractive strategy for some investors.

6. Positive Gearing

Positive gearing is the opposite of negative gearing. Here, the rental income is higher than the property’s expenses, meaning you make a profit on the property each month. This extra income can help with cash flow and may be taxed at the end of the financial year.

7. Lender’s Mortgage Insurance (LMI)

LMI is a fee charged by lenders when your LVR is above a certain percentage (typically 80%). LMI protects the lender—not the borrower—if you can’t repay the loan. It can add up, so many buyers aim for a deposit that keeps their LVR at 80% or lower to avoid it.

8. Depreciation

Depreciation is the loss of value in assets (like your property’s building or fixtures) over time. Investors can claim this as a tax deduction, which reduces the amount of taxable income and can improve cash flow.

9. Fixed-Rate

A fixed rate means your loan interest rate is locked in for a set period, typically between one and five years. This provides certainty with your repayments, as they won’t change even if market interest rates go up. However, if rates drop, you won’t benefit from the decrease. Fixed-rate loans are popular for investors and homebuyers looking for stability in their budgeting.

10. Rental Yield

Rental yield is a measure of how much rental income a property generates in relation to its purchase price. There are two types:

  • Gross Rental Yield: Calculated before expenses (like loan repayments or maintenance) are taken out.
  • Net Rental Yield: Takes expenses into account, giving a more accurate picture of actual earnings.

11. Stamp Duty

Stamp duty is a state-based tax that buyers pay on property purchases. The amount varies depending on the property’s price and location. Some first-home buyers might qualify for stamp duty concessions or exemptions.

12. Cash Flow

Cash flow is the money that moves in and out of your property investment. Positive cash flow means your income (like rent) is higher than your expenses, while negative cash flow means your expenses are higher. Managing cash flow is key to keeping your investment on track.

Understanding these basic terms helps build confidence and sets the stage for making informed decisions. Keep these terms in mind as you start or continue your property journey in 2025—because knowing the basics is the first step to mastering the market!