A

Application – A formal request submitted to a lender for a home loan, including personal, financial, and property information. (See also: Pre-Approval).

Application Fee – A one-off fee some lenders charge to process a new home loan application.

Assessment Rate – The higher interest rate lenders use to “stress test” your ability to repay a loan, ensuring you can still afford repayments if rates rise.

Assets – Valuable items you own, such as property, cars, savings, or investments, used to assess your borrowing capacity.

B

Best Interest Duty (BID) – A legal requirement for mortgage brokers in Australia to act in the client’s best interests when recommending loan options. Banks are not required to follow this duty.

Borrowing Capacity – The amount a lender determines you can borrow, based on your income, expenses, and existing debt.

Break Costs – Fees charged if you exit a fixed rate loan before the fixed term ends.

Bridging Loan – A short-term loan that allows you to buy a new property before selling your existing one.

Broker – A mortgage broker works with multiple lenders to recommend a suitable loan, unlike banks who only sell their own products.

Building & Pest Report – An inspection report often required before settlement to check the condition of a property.

C

Capital Gains Tax (CGT) – A tax on the profit made when selling an investment property, based on the difference between the purchase and sale price.

Capital Growth – The increase in the value of a property over time.

Cash-Out Refinance – A type of refinancing where you increase your loan amount and take out the difference in cash, often using equity for investment or personal needs.

Cash Rate – The interest rate set by the Reserve Bank of Australia (RBA), which influences home loan rates across the country.

Comparison Rate – A rate that combines the loan’s interest rate and most fees into a single percentage figure, helping you compare loans more accurately.

Conditional Approval – Also known as pre-approval, this is an indication from a lender that you qualify for a loan up to a certain amount, based on the documents you’ve provided.

Conveyancer – A licensed professional who handles the legal transfer of property ownership from seller to buyer.

Credit Report – A record of your borrowing and repayment history, used by lenders to assess your loan application.

Credit Score – A number based on your credit history that reflects your likelihood of repaying debts.

Cross-Collateralisation – This occurs when a lender uses more than one property as security for a single loan, or when multiple loans are secured by the same properties. For example, if you own an investment property and your home, a bank may tie both together as security. While this can sometimes help you borrow more, cross-collateralisation also reduces flexibility. It means if you want to sell one property, refinance, or restructure your loans, you may need to revalue or change all properties involved. Many investors prefer to avoid cross-collateralisation because it can limit future borrowing options and increase risk.

D

Debt Consolidation – Combining multiple debts (like credit cards and personal loans) into a single loan, often at a lower interest rate.

Debt-to-Income Ratio (DTI) – A measure comparing your total debts to your income, used by lenders to determine borrowing capacity.

Deposit – The upfront money you contribute towards a property purchase, usually 5–20% of the property value.

Discharge Fee – A fee charged by a lender when you pay off and close your loan.

Drawdown – The release of loan funds by the lender, usually at settlement.

E

Early Repayment Fee – A fee that may apply if you pay off a loan earlier than agreed, typically on fixed rate loans.

Equity – The difference between your property’s market value and the amount you still owe on the loan.

Equity Release – Accessing the usable equity in your property (the value minus your loan balance) to fund renovations, investments, or other purchases.

Extra Repayments – Additional payments made above your minimum repayment, helping you reduce your loan faster.

F

Fixed Rate Loan – A loan where the interest rate is locked in for a set period, providing certainty of repayments.

First Home Owner Grant (FHOG) – A government incentive available to eligible first home buyers in Australia. (See also: Government Schemes).

First Home Guarantee – A government scheme that allows eligible first home buyers to purchase with as little as 5% deposit without paying LMI.

Formal Approval – Also called unconditional approval, this is the lender’s official confirmation that your loan has been approved.

G

Genuine Savings – Money you’ve saved yourself (not gifted), often required by lenders as proof of good financial habits.

Government Schemes – Incentives like the First Home Guarantee, Family Home Guarantee, and Regional First Home Buyer Guarantee that help Australians enter the property market.

Guarantor – A person (usually a parent) who offers their property as additional security for your loan.

H

Home Equity Loan – A loan that allows you to borrow against the equity in your property.

Honeymoon Rate – A discounted interest rate offered at the start of a loan, usually for the first 1–2 years, before reverting to a higher rate.

I

Interest Rate – The percentage charged by a lender on the money you borrow.

Interest-Only Loan – A loan where you only repay the interest for a set period, not the principal.

Investment Loan – A loan used to purchase a property that you plan to rent out or hold for capital growth.

J

Joint Application – A home loan application made by two or more people, such as partners or family members.

L

Lender – A bank, credit union, or non-bank financial institution that provides home loans.

Lender’s Mortgage Insurance (LMI) – Insurance that protects the lender if you default on your loan, usually required when borrowing over 80% of the property’s value.

Line of Credit – A revolving loan facility that allows you to borrow and repay funds up to a set limit.

Loan Term – The length of time you have to repay your loan, typically 25–30 years in Australia.

Loan-to-Value Ratio (LVR) – The percentage of the property’s value you are borrowing.

M

Maturity Date – The date when your loan term officially ends.

Mortgage – A legal agreement that gives a lender the right to sell your property if you cannot repay the loan.

Mortgage Broker – A licensed professional who compares loan products across multiple lenders and provides tailored recommendations.

Mortgage Offset Account – See Offset Account.

N

Negative Gearing – An investment strategy where the costs of owning a property (interest, fees, expenses) exceed the rental income, which may be tax-deductible.

Non-Bank Lender – A financial institution that offers loans but is not a traditional bank, often with more flexible lending policies.

O

Offset Account – A transaction account linked to your loan. The balance in this account reduces the interest charged on your home loan.

Owner-Occupied Loan – A loan taken out to purchase a property you intend to live in.

P

Portability – A loan feature that lets you transfer your existing home loan to a new property without taking out a brand-new loan.

Portfolio Diversification – Spreading investments across different properties or asset types to manage risk and build wealth.

Positive Gearing – When rental income from an investment property is higher than the costs, generating additional cash flow.

Pre-Approval – A lender’s confirmation that you qualify to borrow up to a certain amount before finding a property.

Principal – The original amount borrowed for your loan.

Principal & Interest Loan – A loan where repayments cover both the amount borrowed and the interest charged.

R

Redraw Facility – A loan feature allowing you to access any extra repayments you’ve made.

Refinancing – Switching your current loan to a new one, often for a better rate, features, or to access equity.

Rental Yield – A measure of the income generated from an investment property, expressed as a percentage of the property’s value.

Repayment Holiday – A temporary pause on making loan repayments, usually granted in special circumstances.

Reserve Bank of Australia (RBA) – Australia’s central bank, which sets the official cash rate influencing interest rates.

S

Security – The asset (usually property) a lender uses as protection for a loan.

Serviceability – A lender’s calculation of your ability to meet loan repayments based on income and expenses.

Settlement – The final stage in the property purchase when funds are transferred and ownership changes hands.

Split Loan – A loan where part is fixed and part is variable, giving a mix of stability and flexibility.

Stamp Duty – A state or territory government tax charged on property purchases.

Switching Fee – A fee charged for changing your loan product or repayment type with the same lender.

T

Top-Up Loan – An increase to your existing home loan, often used to access equity.

Title Search – A legal check of property ownership and any restrictions, usually carried out before settlement.

Transfer Duty – Another term for Stamp Duty.

U

Unconditional Approval – Final loan approval granted by a lender once all checks are complete.

Uniform Consumer Credit Code (UCCC) – Legislation governing how consumer credit is provided in Australia.

V

Valuation – An assessment of a property’s market value by a qualified valuer, used by lenders before approving a loan.

Variable Rate Loan – A loan with an interest rate that may go up or down depending on lender changes and RBA movements.

Z

Zoning – Local council rules that determine how land can be used (residential, commercial, industrial).

.