Home loan jargon, explained in plain English. No confusing fine print.
Assessment rate
The higher 'what if' rate a lender tests you at, usually about 3% above the real rate. Read more →
BAS
A Business Activity Statement you lodge with the ATO that reports your business income and GST over a period. Read more →
Borrowing power
A rough estimate of how much a lender may let you borrow, based on your income, debts and spending. Read more →
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. Read more →
Break-even point
The time it takes for your monthly savings to cover the cost of switching loans. Read more →
Deposit
The cash you put towards the purchase up front, with the rest covered by your home loan. Read more →
Discharge fee
A fee your old lender may charge to close and release your existing loan when you switch. Read more →
Equity
The share of your home you actually own, worked out as its value minus what you still owe on the loan. Read more →
First home buyer concession
A scheme that lets eligible first home buyers pay reduced or no stamp duty up to certain price limits. Read more →
Fixed rate
An interest rate that stays the same for a set period, so your repayments do not change during that time. Read more →
Formal approval
The lender's final yes on your loan after they have checked the property and your documents, also called unconditional approval. Read more →
Guarantor
A family member who uses their own equity or property to help support your loan. Read more →
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. Read more →
Interest
The fee a lender charges for borrowing money, usually worked out as a percentage of what you owe. Read more →
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. Read more →
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. Read more →
Low-deposit scheme
A government program where part of your loan is guaranteed, so you can buy with a smaller deposit and avoid LMI. Read more →
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. Read more →
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%. Read more →
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. Read more →
P&I (Principal and Interest)
Repayments that pay down the loan and cover interest, so the balance drops over time. Read more →
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. Read more →
Principal
The amount of money you still owe on your loan, not counting interest. Read more →
Redraw facility
A loan feature that lets you take back extra repayments you have made above your minimum. Read more →
Refinance
Replacing your current home loan with a new one, often to change rates, features or lenders. Read more →
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. Read more →
Servicing
Lender-speak for whether your income comfortably covers the repayments. Read more →
Settlement
The day the loan funds are paid, the property title transfers and the home officially becomes yours. Read more →
Split loan
A loan where part sits on a fixed rate and part on a variable rate, giving you a mix of both. Read more →
Stamp duty (transfer duty)
A government tax on buying property. First home buyers often pay less, or nothing, up to set price limits. Read more →
Unconditional approval
The final loan approval, given once a specific property and your details are fully checked. Read more →
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. Read more →
Valuation
A lender's assessment of how much a property is worth, used to confirm it is suitable security for the loan. Read more →
Variable rate
An interest rate that can go up or down over time, which means your repayment can change. Read more →