Buying or selling property comes with its own language, and understanding a few key terms can help Australians make sense of home loans, taxes and purchasing costs.

Loan term: Australian lenders generally talk about the “loan term”. This is the period over which a home loan is repaid. ASIC’s Moneysmart says principal-and-interest loans involve regular repayments of both the amount borrowed and interest, commonly over 25 or 30 years.

Transfer duty: Often still called stamp duty, transfer duty is a state or territory tax generally payable when property is purchased. In NSW, Revenue NSW calculates duty on the property’s dutiable value using a sliding scale. Eligible first-home buyers can receive exemptions or concessions under the First Home Buyers Assistance Scheme.

Capital gain: A capital gain can arise when an asset is sold for more than its relevant cost base. Property transactions can attract capital gains tax, although the Australian Taxation Office says a home that has been an owner’s main residence will generally qualify for a CGT exemption, subject to eligibility rules.

Lenders mortgage insurance: Lenders mortgage insurance, or LMI, protects the lender rather than the borrower if a home loan cannot be repaid. Moneysmart says borrowers with a loan-to-value ratio above 80 per cent may be required to pay LMI, although government schemes can allow some eligible buyers to purchase with smaller deposits without it.

Understanding these terms before signing a contract or loan agreement can help buyers better assess the true cost of purchasing a home.

This is general information and so individuals should seek professional advice suitable to their specific circumstances.