The lending world is full of jargon and industry terms. This glossary will help you understand the language used in home loans, property purchases, and finance.

.

AAPR (Average Annualised Percentage Rate)
Also called the Compulsory Comparison Rate. This rate factors in certain fees and charges to show the true cost of a loan, making it easier to compare products.

Acceptance
Agreeing to the terms of an offer or contract.

Additional Repayment
Extra funds paid into your loan above the required minimum repayment.

Agent
A licensed real estate professional.

Amortisation Period
The total time it will take to repay a loan.

Application Fee
A charge by the lender to cover the cost of setting up your loan.

Arrears
Overdue payments.

Assets
Property, money, or other valuable items you own.

Asset Lender
A lender that bases the loan on the value of an asset offered as security.

Assignment
The legal transfer of rights or ownership to another party.

Banker’s Lien
The bank’s right to hold a customer’s property until debts are repaid.

Bankruptcy
A legal status when an individual or business cannot pay their debts. A trustee takes control of the assets to distribute to creditors.

Borrower
The person or entity taking out the loan.

Buyer’s Agent
A professional who acts on behalf of a buyer to find and negotiate property purchases.

Capital
The value of your assets, such as property, savings, or business interests.

Capital Gain
The profit from selling an asset for more than you paid for it. May be subject to Capital Gains Tax.

Caveat
A legal notice placed on a property title to warn others of a claim over the property.

Charge (Over Property)
A legal right registered over a borrower’s property to secure a debt.

Collateral Security
Additional security offered alongside the main security for a loan.

Comparison Rate
A rate that includes both interest and certain fees to give a true picture of loan costs. Calculated using a standard formula under the National Credit Code.

Contract of Sale
A legal document outlining the terms for buying or selling property.

Conveyancing
The legal process of transferring property ownership.

Daily Interest
Interest calculated daily on the outstanding loan balance.

Debtor
A person or entity who owes money.

Deed
A formal legal document that records an agreement.

Depreciation
A decrease in the value of an asset over time, often used for tax purposes.

Direct Debit
Automatic transfer of a payment from your bank account.

Disbursements
Out-of-pocket costs paid by solicitors or conveyancers during settlement (e.g., title searches).

Drawdown
When loan funds are released to the borrower.

DSR (Debt Service Ratio)
A measure of your ability to meet loan repayments based on income and expenses.

Encumbrance
A claim or liability over a property, such as a mortgage.

Equity
The difference between a property’s value and the amount still owed on it.

Estate
An interest or share in land.

Exchange
The point where buyer and seller sign and swap contracts.

Fee Simple
The highest form of property ownership available in Australia, subject to Crown rights.

Fittings
Items in a property that can be removed without damage (e.g., curtains).

Fixed Interest Rate
An interest rate locked in for a set period.

Fixtures
Items attached to the property that cannot be removed without damage (e.g., built-in oven).

Garnishee Order
A court order directing an employer or bank to pay part of someone’s income or funds to a creditor.

Government Fees
Charges such as stamp duty and registration fees, payable at settlement.

Gross Income
Income before tax and other deductions.

Guarantor
A person who agrees to pay the loan if the borrower cannot.

Holding Deposit
A sum paid to show intent to purchase, often refundable.

Indemnity
Compensation for loss or damage.

Instrument
A formal legal document, such as a deed.

Interest
The lender’s charge for using their funds.

Interest-Only Loan
A loan where you only pay interest for a set period, with the principal repaid later.

Joint and Several Liability
When two or more people are each responsible for the full loan debt.

Joint Tenancy
Equal ownership of a property by two or more people, where ownership passes to the survivor if one dies.

Liability
A debt or obligation.

Loan
Money lent to a borrower under an agreement to repay.

LVR (Loan-to-Value Ratio)
The loan amount compared to the property’s value.

Maturity
The date the loan or investment must be repaid in full.

Mortgage
A legal agreement giving the lender security over a property.

Mortgagee
The lender in a mortgage.

Mortgagor
The borrower in a mortgage.

Negative Gearing
When investment costs exceed the income it produces, creating a tax deduction.

Net Income
Income after tax.

Net Profit
Profit after all expenses, before tax.

Off-the-Plan Purchase
Buying a property before it is built, based on plans.

Portability
Moving your existing loan to a new property without refinancing.

Power of Attorney
Authority given to another person to act on your behalf.

Principal
The amount of money borrowed.

Principal & Interest Loan
A loan where you pay both the borrowed amount and interest.

Property
Something you own, either tangible (like a house) or intangible (like shares).

Redraw
Access to extra repayments you’ve made on your loan.

Refinancing
Replacing an existing loan with a new one.

Search
Checking property records to confirm ownership and identify any encumbrances.

Security
An asset offered to a lender to guarantee a loan.

Serviceability
Your capacity to meet loan repayments.

Settlement
The final transfer of ownership and payment for a property.

Surety
A person or entity who guarantees repayment of a debt.

Tenants in Common
Property ownership where each person holds a defined share, which can be passed on via their will.

Term
The length of a loan.

Third-Party Security
Security provided by someone other than the borrower.

Title Deed
Official record of property ownership.

Title Search
Checking public records to confirm property ownership.

Torrens System
The property ownership system used in Australia, where details are recorded on a single title document.

Unencumbered
A property with no mortgage or claims against it.

Valuation
A professional assessment of a property’s market value.

Variable Interest Rate
An interest rate that moves with market conditions.

Variation
A change to the terms of a loan.

Vendor
The current owner selling a property.