Whether you’re a first-home buyer or a seasoned investor, this glossary will help you navigate the mortgage process with confidence.


Term Definition
Account Declaration

An accountant declaration is a statement provided by a qualified accountant confirming an individual’s financial details and income.

An accountant declaration is often required during the home loan application process.

Airbnb Income

Airbnb income refers to the money you earn from renting out your property or a part of your home to short-term guests through the Airbnb platform. Some lenders will accept Airbnb income when assessing your loan application.

Allowance Income

Allowance income is money you receive regularly, typically from a government or other source, which a lender may consider when applying for a home loan.

Annual Fee

An annual fee is a charge that some lenders impose on borrowers for the ongoing maintenance and administration of their loan.

Application Fee

An application fee is a charge a borrower pays to cover the costs of processing a loan.


Being in arrears means having overdue mortgage payments.

Australian Business Number (ABN)

This is the unique 11-digit number that identifies your business to the government and community. It is issued by the Australian Business Register (ABR).

Australian Prudential Regulation Authority (APRA)

The APRA is the government body responsible for regulating and supervising financial institutions in Australia, including banks, insurance companies, and superannuation funds. It ensures the stability and safety of the financial system to protect the interests of consumers.

Australian Securities and Investments Commission (ASIC)

ASIC is the government agency in Australia responsible for regulating and overseeing the country’s financial markets and financial services industry. It monitors and enforces laws to ensure fair and transparent financial dealings, protecting investors and consumers.

Australian Taxation Office (ATO)

The ATO is the principal revenue collection agency for the Australian Government.


Term Definition
Bad Credit

Bad credit describes a situation where an individual has a poor credit history or a low credit score due to late payments, defaults or other credit-related issues. There are lenders who will work with borrowers who have bad credit.

Basic Rate

The basic rate is the lowest rate that a lender offers on a home loan. This is usually applied to loans commonly called ‘No Frills Loans’, which are generally cheaper than Standard Variable Rate Loans but do not have features such as a redraw facility or mortgage offset.

Basis Point

The basis point is a unit of measurement used to express changes in interest rates or yields. One basis point is equivalent to 1/100th of a percentage point, or 0.01%. Ten basis points equal 0.10%.

Best-Interests Duty (BID)

The BID is a legal obligation for mortgage brokers in Australia to prioritise the financial interests and wellbeing of their clients when providing home loan advice and services.

Borrowing Capacity

Borrowing capacity is the maximum amount of money a financial institution is willing to lend you to purchase a home or other assets. It is based on various factors, including your income, expenses and credit history, and the lender’s lending criteria.

Learn how you can increase your borrowing power.

Break Costs

Break costs are fees borrowers incur when they choose to repay their fixed-rate mortgage or home loan earlier than the agreed-upon term, typically to account for the lender’s loss of expected interest income.

Bridging Loan

A bridging loan is a short-term loan you can get to help buy a new home before selling your old one. It covers the gap between buying and selling.

Building Insurance

A building insurance policy protects your house from unexpected events, like fires or storms.

Business Activity Statement (BAS)

The business activity statement is the form that businesses in Australia use to report and pay their taxes, including goods and services tax (GST), pay-as-you-go (PAYG) instalments, PAYG withholding tax, and other charges. If you’re self-employed or have business income, the lender may request additional financial documentation, including a BAS, to assess your overall financial situation.


Term Definition
Capital Gains Tax (CGT)

Capital gains tax is a fee you pay when you profit from selling an asset, like a property; CGT is calculated based on the increase in an asset’s value since you bought it, and how long you held the asset.

Capital Growth

This is also known as capital appreciation. Capital growth is the increase in the value of an asset over time.

Cash Rate

The cash rate is the market interest rate commercial banks charge one another for overnight loans. It is also known as the bank rate or the base interest rate.


Cashback is a financial incentive some lenders offer for refinancing or purchasing property. Borrowers get a portion of the money they’ve spent on a loan as a refund or rebate.

Certificate of Title

A Certificate of Title is an official document that proves your legal ownership of a property.

Comparison Rate

The comparison rate is the true cost of a home loan, taking into account interest charges and other fees and costs.

Conditional Approval

A preliminary agreement from a lender indicating they will probably approve your mortgage application, subject to certain conditions being met. The ‘conditions’ of conditional approval often include further verification of your financial information or the property’s appraisal.

Find out more about conditional versus unconditional approval.

Construction Loan

A construction loan provides financing specifically for building or renovating a property. You borrow funds in stages as construction progresses.

Contents Insurance

A contents insurance policy covers the cost of replacing or repairing your personal belongings, such as furniture, electronics, and other possessions, in case they are damaged, stolen or destroyed due to events like fires or theft within your home.

Contract Of Sale

A contract of sale is a legally binding agreement between a buyer and a seller for the transfer of property. It outlines the terms and conditions of a property sale.

Find out more about a contract of sale.


Conveyancing is the legal process of property transfer from seller to buyer, which a licensed conveyancer or solicitor usually undertakes.

Cooling-Off Period

A cooling-off period is a window of time – usually 2-5 days – after the signing of the contract of sale, during which the buyer can decide not to buy the property without paying hefty penalties.

Find out more about the cooling-off period.

Credit Report

A credit report summarises a person’s credit history, including their borrowing and repayment activities, outstanding debts and credit score.

Find out how to get a free credit report.

Credit Score

A credit score is a numerical representation of an individual’s creditworthiness based on their credit history and financial behaviour. It helps lenders assess the risk of lending to that person.


Cross-collateralisation is a financial strategy in which more than one property is used as security for a mortgage, rather than the more common arrangement of one property securing one mortgage. Investors often use it to purchase additional properties without having to make a cash deposit on each property.

Read about the pros and cons of cross-collateralisation.


Term Definition
Debt Consolidation

Debt consolidation is the process in which a borrower combines some or all of their debts into their home loan so that there is one simple monthly repayment, usually at a comparatively lower interest rate.

Read about debt consolidation.

Debt-To-Income Ratio (DTI)

Your DTI is your total debts and liabilities divided by your gross (before-tax) income. It is a tool banks use to measure your ability to make mortgage repayments comfortably without going into financial hardship.

Find out more about the debt-to-income ratio.


A default occurs when a borrower fails to meet a financial obligation, such as missing loan payments or not fulfilling other terms of a financial agreement.

Deposit Bond

A deposit bond is a substitute for cash deposits that are needed when buying a home or bidding at auctions. It is a guarantee that you will pay your deposit when you exchange contracts on a property purchase. This is also known as a deposit guarantee.


A deposit is the initial contribution you make towards the purchase price of the property you’re buying. Use our home loan deposit calculator to find out if you have enough deposit for your home loan.


Depreciation is the decrease in the value of an asset over time, often due to wear and tear or obsolescence. It reflects the declining worth of the asset as it ages.

Find out more about depreciation.

Discharge Form

A discharge form is a legal document that serves as confirmation that the borrower has fully repaid their loan, releasing any legal claims the lender had on the property due to the loan. In the context of refinancing, the new lender pays off the old lender and assumes control of the loan.

See our list of discharge forms.


Term Definition
Equity Loan

This is a type of loan that allows you to borrow money against the equity you’ve built up in your home. An equity loan is typically used for purposes like home improvements or other major expenses.

Read more about home equity loans.

Equity Release

A financial arrangement allowing homeowners to unlock some of their property’s value without selling it, essentially replacing their existing mortgage with a larger one and receiving the surplus cash. An equity release is also known as cash-out refinancing.

Read all about the ins and outs of equity releases.


Your home equity is the difference between the current value of your home and what you owe on your home loan.

Exchange Of Contracts

One crucial stage in a property sale is the exchange of contracts, when both the buyer and seller sign legally binding contracts. At this point, the property transaction becomes legally enforceable, and the terms and conditions of the sale, including the price and completion date, are set in stone.

Extra Repayments

Extra repayments can help borrowers repay a loan faster, reduce interest costs, and potentially shorten the loan term.


Term Definition
Family Tax Benefits (FTB)

FTBs are financial assistance payments the Australian Government gives to eligible families to help with the cost of raising children.

First Home Owner Grant (FHOG)

The FHOG is a government initiative that provides financial assistance to first-time homebuyers. It’s a one-time grant offered to eligible individuals or couples to help them purchase their first home. The specific eligibility criteria and grant amount can vary among states and territories.

Fixed Interest Rate

A fixed interest rate on a home loan does not change over a pre-determined period.

Fixed Price Construction

Fixed-price construction or fixed-rate construction is when there is an agreement between the construction company and the client to establish a set price for contracted services at the beginning of a project.

Flood Zone

A flood zone is an area authorities have designated where there is a higher risk of flooding due to natural factors like heavy rainfall, river overflow, or coastal tides.


Frequency is how often a borrower makes repayments on their loan. Common repayment frequencies are monthly, fortnightly and weekly.

Funding Position

This is the amount of money that a person needs to borrow to purchase or refinance a property. Funding position takes into account all the costs associated with the purchase or refinancing of a property and then subtracts the funds that the buyer has available for the transaction. Here’s an example of how the funding position is calculated.


Term Definition
Gambling History

A record of a borrower’s participation in wagering and gaming activity. Lenders may check a gambling history when assessing a home loan application, due to its potential impact on financial stability and loan repayment capability.

Genuine Savings

Genuine savings are funds that a homebuyer has saved over time through their own efforts, rather than receiving them as a gift or loan. Lenders often require a deposit to be genuine savings.

Gifted Funds

Gifted funds refer tcash or other financial assets that someone, typically a family member or friend, gives to another person as a gift without the expectation of repayment. Gifted funds can be used to cover a portion of the deposit, closing costs, or other home-buying expenses.


A guarantee is a legal commitment in which one person or entity agrees to take responsibility for the debt or obligation of another person or entity if they are unable to fulfil it themselves.


A guarantor is an individual, often a family member or close friend, who agrees to take on the responsibility of repaying a loan if the primary borrower (the homebuyer) defaults on their mortgage payments.

Find out more about who can be a guarantor.


Term Definition
Honeymoon Rate

A honeymoon rate is a temporary, lower, introductory interest rate lenders offer on home loans. These lower rates are designed to attract borrowers, but they increase after the honeymoon period ends – typically 6-12 months.

Household Expenditure Model (HEM)

The HEM is a standard benchmark lenders in Australia use to estimate a borrower’s living expenses when assessing their ability to repay a home loan. It is an estimate of the total amount of money a household spends on goods and services over a defined period of time.


Term Definition
Inner City/High Density

Inner city/high density describes areas in or near the central part of a city where there is a higher concentration of buildings, businesses and residences. Inner city/high density areas are characterised by a greater population density and often have more compact housing options, such as apartments or townhouses, due to limited space.

Interest In Advance

An interest in advance home loan is one on which a borrower makes interest-only payments on a home loan upfront, usually for a year. Some investors use this strategy to add to their investment income, as the interest payments are tax-deductible.

Interest-Only Repayments

Interest-only repayments describe the term during which the borrower pays only the interest portion of the repayment each month, without reducing the principal.

Learn more about interest-only rates.

Interest Rate

An interest rate is the percentage a lender uses to calculate how much interest to charge a borrower in each repayment.

Compare the lowest home loan interest rates from our panel of lenders.

Investment Loan

An investment loan is a type of home loan designed for purchasing properties – such as rental homes – for capital appreciation or income. Investment loans typically have higher interest rates than standard home loans, as banks typically consider them riskier.


Term Definition
Joint Tenants

A joint tenant is a legal arrangement in which two or more people co-own a property.

Find out the difference between joint tenants or tenants in common.


Term Definition
Lenders Mortgage Insurance (LMI)

Lenders mortgage insurance is an insurance that protects the lenders in case the borrower defaults on their repayments. LMI is usually required when the borrower has a deposit of less than 20% of the property value.

LMI lowers the risk for the lender when a borrower uses a deposit of less than 20%. The fee for the borrower depends on the price of the home and can be several thousand dollars.

Find out how much premium you’ll have to pay with our Lenders Mortgage Insurance calculator.


Liabilities are financial obligations or debts, such as a mortgage, car loan, or credit-card balance. They can affect your ability to qualify for a home loan, as lenders consider your total liabilities when determining your debt-to-income ratio.

Line Of Credit

A line of credit is a flexible arrangement that allows borrowers to access funds up to a predetermined limit. You can withdraw and repay money as needed, much like a credit card.

Find out more about the line of credit home loan.

LMI Capitalisation

Lenders mortgage insurance capitalisation is when the lender adds the cost of LMI to the borrower’s loan amount.

Read more about LMI capitalisation.

Loan Limit

A loan limit is the maximum amount a lender is willing to provide as a home loan to a borrower.

Loan Structure

This refers to the specific terms and conditions that define how a loan is organised. The loan structure includes details such as the interest-rate type, the loan term, the repayment frequency, and any special features or options included in the loan.

Loan Term

A loan term is the length of time, typically in years, to which a borrower commits to making regular mortgage payments. Ending a loan term early may mean additional costs for the borrower.

Loan-to-Value Ratio (LVR)

The LVR is the portion of a property’s value that is borrowed in a home loan against the property as security, expressed as a percentage.

Low-Documentation (Low-Doc) Loan

A low-doc loan is a type of home loan designed for borrowers who may not have traditional income documentation, such as tax returns or pay stubs, to support their loan application. Instead, they provide alternative forms of income verification.

Lump-Sum Payment

A lump-sum payment is a one-off payment made by a borrower to reduce the loan amount. These payments are in addition to regular instalments.


Term Definition

Maturity is the date when the final payment on a loan is due. Legal action may be taken if a loan is not fully repaid by this date.


Medico refers to a medical professional, such as a doctor or nurse.

Mortgage Stress

Mortgage stress occurs when a homeowner is in a position that may not allow them to make repayments and pay their other bills comfortably. Borrowers are considered under mortgage stress if their repayments are greater than or equal to 30% of their household income.


A mortgagee is the lender or financial institution that provides the home loan to the borrower.


A mortgagor is a borrower who obtains a home loan and pledges their property as collateral to secure it.


Term Definition
Negative Gearing

Negative gearing is a financial strategy employed to leverage tax benefits by borrowing money to purchase an income-producing asset, such as a rental property, that generates less income than the cost of owning and managing the asset in the short term.

Read all about negative gearing.

No-Documentation (No-Doc) Loan

A no-doc loan is a ‘no proof of income’ home loan option that doesn’t require as many financial documents as in a regular home loan.

Learn about the leading criteria for a no-doc home loan.

Non-Conforming Loan

A non-conforming loan is a type of home loan for a borrower who doesn’t meet the standard lending criteria set by traditional lenders, such as banks. This type of loan is usually offered by specialist lenders.


A non-resident is an individual who is not a permanent resident of Australia. Special rules often apply to Australian expats and foreign citizens who want to buy property here.

Find out how you can get a home loan in Australia as a non-resident.


Term Definition
Offset Facility

An offset facility is a feature that links your home loan to a savings or transaction account. The balance is offset against the outstanding balance of the home loan when calculating interest.

Owner Occupied

A property owned by the mortgage holder, as opposed to one used for investment purposes.


Term Definition
Part 9 Debt Agreement

A Part 9 debt agreement is a formal agreement between a debtor and creditors to repay a portion of their debts over a specified period.

Partial Offset

Partial offset is a type of offset account that allows borrowers to offset only a portion of their total account balance against their principal.

Find out more about the partial offset account.


‘Pay As You Go’ refers to a type of employment where a person receives a regular salary and has taxes withheld from their pay by their employer.


The term portability refers to a feature that allows borrowers to transfer their existing mortgage, including its terms and conditions, from one property to another when they sell their home and buy a new one.

Positive Gearing

Positive gearing is an investment strategy in which the rental income generated from an investment property is greater than all the expenses of ownership, including mortgage repayments, property management fees, and maintenance costs, providing an income for the owner.

Power Of Attorney

Power of attorney is a legal document allowing one person (the principal) to give another person or entity (the attorney-in-fact or agent) the authority to make decisions and act on their behalf.


A pre-approval is a preliminary evaluation by a lender that indicates the maximum amount of money a borrower may be eligible to obtain via a home loan.

Principal And Interest Repayments (P&I Repayments)

P&I repayments are regular payments on a home loan that cover both the borrowed amount (principal) and the interest the lender charges. A pre-approval is a valuable tool for homebuyers, as it can help them determine how much they can afford to spend on a home, get a better understanding of their monthly mortgage payments, and make a stronger offer on a home.


A principal is the initial amount of money borrowed in a home loan.

Progress Payment

The term progress payment refers to payment made by the borrower (often the homeowner) to the builder or contractor at specific milestones or stages of the project’s completion.


Term Definition
Redraw Facility

A redraw facility is a home loan feature that allows you to withdraw any extra repayments that you’ve made over the required minimum on your home loan.


Refinancing is the process of replacing an existing home loan with a new one, typically to take advantage of lower interest rates or secure other, more favourable terms.

Find out everything you need to know about refinancing a home loan.


Rentvesting is a strategy in which an individual or household chooses to rent a property for their residence while simultaneously investing in other properties, often in more affordable or high-growth areas.

Repayment Holiday

A repayment holiday, also known as a ‘payment pause’, is a temporary period during which a borrower is allowed to suspend their regular loan repayments.

Reserve Bank of Australia (RBA)

The RBA is Australia’s central bank, responsible for overseeing the country’s monetary policy. It manages the supply of money and regulates interest rates, among other duties.

Revert Rate

A revert rate is the interest rate you will pay on your home loan after your introductory or fixed-rate period ends. Most lenders automatically revert borrowers to their standard variable rate.


Term Definition

A security is an asset or property that a borrower pledges to the lender as collateral for the loan.

Self-Managed Superannuation Fund (SMSF)

An SMSF is a type of retirement savings fund in Australia that allows individuals to manage and control their own superannuation investments.

Read about SMSF borrowing power to find out how banks will assess the borrowing power of your fund.

Self-Managed Superannuation Fund (SMSF) Loan

An SMSF loan is a type of home loan that allows individuals to use their SMSF to purchase property.


Serviceability refers to the assessment of a borrower’s ability to meet the financial obligations of a loan, including making regular repayments.

Find out more about serviceability.


The settlement of a home loan is the final stage of the property transaction. It’s the point at which the buyer and seller complete the necessary legal and financial processes to transfer ownership of the property.

Split Loan

A split loan allows borrowers to divide their loan into multiple parts, with each one having a different interest rate and repayment structure. Learn more about the benefits and drawbacks of a split loan.

Stamp Duty

A stamp duty is a tax state and territory governments in Australia impose on various transactions, including the purchase of property, such as homes or land. It’s typically a one-time payment the buyer makes, and is calculated based on the property’s purchase price.

Use our stamp duty calculator to find out how much duty you will have to pay.


Surplus is the extra money that remains after all expenses and financial obligations have been met.


Term Definition
Unconditional Approval

An unconditional approval is the final approval granted by a lender after a thorough assessment of the borrower’s financial situation, the property, and all required documentation. It signifies that the lender is fully committed to providing the loan, pending the fulfillment of any specific conditions outlined in the approval. This is also known as formal approval.


An unencumbered property is free and clear of any financial claims, liens, or debts. That is, there is no mortgage or other legal financial obligation attached to it.


Term Definition

A valuation is the process of determining a property’s estimated worth, typically conducted by a qualified valuer or appraiser.

Get a free upfront property valuation report today.

Variable Interest Rate

A variable interest rate is an interest rate on a home loan that can change over time in response to fluctuations in the financial market.


A vendor is the person or entity that is selling a property.

Vendor Finance

Vendor finance occurs when a buyer borrows money directly from a seller (vendor) instead of a bank or lender.

Ready To Begin Your Home-buying Journey?

Now that you’re armed with essential mortgage terms, take the next step towards homeownership with confidence. Our mortgage brokers are passionate about helping you find the right loan for your needs and starting you on the path to owning your dream home. Call us today at 1300 889 743 or fill in our free online assessment form to get started.