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GLOSSARY

Mortgage and home loan terms without the jargon

Search or browse plain-English definitions, then follow the related links for more detail.

Glossary definitions

A

Application fee

A lender fee that may apply when establishing or assessing a loan.

B

Break cost

A cost that may apply when a fixed-rate loan is repaid or changed before the fixed period ends.

Bridging loan

Short-term finance used when a new property is purchased before an existing property is sold.

C

Comparison rate

A rate combining interest and certain fees using standard assumptions to help compare loans.

Conditional approval

A lender approval subject to stated requirements being met.

Construction loan

A loan that generally releases building funds in stages as work progresses.

Credit report

A record containing information about credit accounts, applications and repayment history.

D

Deposit

The buyer’s funds contributed toward the purchase price, separate from other purchase costs.

Discharge

The process of releasing a lender’s mortgage when a loan is repaid or refinanced.

E

Equity

The difference between a property’s value and debt secured against it.

F

Fixed interest rate

An interest rate set for an agreed period, subject to the loan contract.

G

Genuine savings

Funds that meet a lender’s requirements for being saved or held over a specified period.

Guarantor

A person who promises to meet specified loan obligations if the borrower does not.

I

Interest-only repayment

A required repayment covering interest without reducing principal during the interest-only period.

L

Lenders' Mortgage Insurance (LMI)

Insurance that protects the lender against certain losses if a borrower defaults.

Loan-to-value ratio (LVR)

The loan amount expressed as a percentage of the lender’s accepted property value.

O

Offset account

An eligible linked account whose balance reduces the loan amount used to calculate interest.

P

Principal

The amount borrowed, excluding interest and other charges.

Principal-and-interest repayment

A repayment that covers interest and reduces the amount borrowed.

Progress payment

A staged payment made during construction after an agreed work milestone.

R

Redraw

A loan feature that may allow access to eligible extra repayments under lender rules.

Refinance

Replacing or restructuring a loan, often through a new lender or new facility.

S

Security

Property or another asset a lender can rely on under the loan contract.

Serviceability

The lender’s assessment of whether a borrower can afford the loan under its rules and assessment rate.

Settlement

The legal and financial completion of a property purchase or loan change.

Split loan

A loan divided into separate portions, commonly fixed and variable.

Stamp duty

A state or territory tax that can apply to property transactions, subject to current relief and exemptions.

U

Usable equity

The portion of property equity a lender may allow a borrower to access after its limits and assessment.

V

Variable interest rate

An interest rate that can change during the loan term.