- Assessment rate
- The higher 'what if' rate a lender tests you at, usually about 3% above the real rate.
- BAS
- A Business Activity Statement you lodge with the ATO that reports your business income and GST over a period.
- Borrowing power
- A rough estimate of how much a lender may let you borrow, based on your income, debts and spending.
- Break cost
- A fee a lender may charge if you end a fixed rate term early, for example by selling or paying out the loan.
- Break-even point
- The time it takes for your monthly savings to cover the cost of switching loans.
- Deposit
- The cash you put towards the purchase up front, with the rest covered by your home loan.
- Discharge fee
- A fee your old lender may charge to close and release your existing loan when you switch.
- Equity
- The share of your home you actually own, worked out as its value minus what you still owe on the loan.
- First home buyer concession
- A scheme that lets eligible first home buyers pay reduced or no stamp duty up to certain price limits.
- Fixed rate
- An interest rate that stays the same for a set period, so your repayments do not change during that time.
- Formal approval
- The lender's final yes on your loan after they have checked the property and your documents, also called unconditional approval.
- Guarantor
- A family member who uses their own equity or property to help support your loan.
- Home Guarantee Scheme
- A government program that lets eligible buyers purchase with a small deposit while the government guarantees part of the loan, helping them avoid LMI.
- Interest
- The fee a lender charges for borrowing money, usually worked out as a percentage of what you owe.
- Interest rate
- The percentage a lender charges on your loan. Even a small difference adds up over time. Read more →
- Interest-only loan
- A loan where, for a set period, you pay only the interest and not the original amount borrowed.
- LMI (Lenders Mortgage Insurance)
- A one-off cost that can apply with a smaller deposit, which protects the lender, not you, if the loan goes bad.
- Low-deposit scheme
- A government program where part of your loan is guaranteed, so you can buy with a smaller deposit and avoid LMI.
- Low-doc loan
- A home loan for self-employed borrowers who use records like BAS or an accountant's letter instead of full tax returns.
- LVR (Loan-to-Value Ratio)
- Your loan as a percentage of your home's value. Borrow $960,000 against a $1,200,000 home and your LVR is 80%.
- Mortgage broker
- Someone who compares home loans across many lenders and manages your application, usually paid by the lender. Read more →
- Offset account
- An everyday bank account linked to your loan, where the balance reduces the loan amount you pay interest on.
- P&I (Principal and Interest)
- Repayments that pay down the loan and cover interest, so the balance drops over time.
- Pre-approval (conditional approval)
- A lender's written indication that they are likely to lend you a set amount, usually subject to conditions and a time limit.
- Principal
- The amount of money you still owe on your loan, not counting interest.
- Redraw facility
- A loan feature that lets you take back extra repayments you have made above your minimum.
- Refinance
- Replacing your current home loan with a new one, often to change rates, features or lenders.
- Refinancing
- Swapping your current home loan for a new one, often to get a lower rate or different features. Read more →
- Revenue NSW
- The NSW government body that handles transfer duty and publishes the current rules and calculator.
- Servicing
- Lender-speak for whether your income comfortably covers the repayments.
- Settlement
- The day the loan funds are paid, the property title transfers and the home officially becomes yours.
- Split loan
- A loan where part sits on a fixed rate and part on a variable rate, giving you a mix of both.
- Stamp duty (transfer duty)
- A government tax on buying property. First home buyers often pay less, or nothing, up to set price limits.
- Unconditional approval
- The final loan approval, given once a specific property and your details are fully checked.
- Usable equity
- The portion of your equity a lender will let you borrow against, usually up to about 80% of your home's value minus your current loan.
- Valuation
- A lender's assessment of how much a property is worth, used to confirm it is suitable security for the loan.
- Variable rate
- An interest rate that can go up or down over time, which means your repayment can change.
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