Finance Glossary
Understanding financial terminology is crucial for making informed decisions. Browse our comprehensive glossary of finance and mortgage terms.
Bridging Finance
Short-term financing that helps you purchase a new property before selling your existing one.
Capital Gains Tax (CGT)
Tax payable on the profit made from selling an investment property or other assets, with some exemptions for primary residences.
Caveat
A legal notice placed on a property title to protect someone's interest in that property, often used to secure a debt.
Comparison Rate
A rate that includes the interest rate plus most fees and charges, designed to help borrowers compare the true cost of loans.
Construction Loan
A specialized loan for building a new home, where funds are released in stages as construction progresses.
Conveyancing
The legal process of transferring property ownership from seller to buyer, typically handled by a solicitor or conveyancer.
Debt Consolidation
Combining multiple debts into a single loan, often with a lower interest rate or more manageable repayment terms.
Deposit
The upfront payment made when purchasing a property, typically expressed as a percentage of the purchase price.
Equity
The difference between your property's current market value and the outstanding loan amount. This represents your ownership stake in the property.
FHOG (First Home Owner Grant)
A government scheme providing financial assistance to eligible first-time home buyers, with amounts varying by state.
Fixed Rate
An interest rate that remains unchanged for a specific period, providing certainty about your repayments during that time.
Guarantor
A person who agrees to be responsible for loan repayments if the borrower cannot meet their obligations.
Interest Rate
The percentage charged by a lender for borrowing money, typically expressed as an annual percentage rate (APR).
Investment Property
A property purchased primarily to generate rental income or capital gains, rather than as a primary residence.
Line of Credit
A flexible loan facility that allows you to borrow up to an approved limit and only pay interest on the amount used.
LMI (Lenders Mortgage Insurance)
An insurance that protects the banks, where your borrowing exceeds 80% of your property value. This is insurance that you need to pay. But LMI is not a taboo word, it is a way to access the property market earlier.
LVR (Loan to Value Ratio)
The percentage of the property's value that you're borrowing. For example, if you're buying a $500,000 home with a $400,000 loan, your LVR is 80%.
Mortgage Broker
A qualified professional who compares home loans from multiple lenders to find the most suitable option for your needs.
Negative Gearing
When the costs of owning an investment property (including interest) exceed the rental income, resulting in a tax-deductible loss.
Offset Account
A transaction account linked to your home loan that reduces the interest charged by offsetting your savings against your loan balance.
Pre-approval
Conditional approval from a lender indicating how much you can borrow, valid for a specific period (usually 90 days).
Principal
The original amount of money borrowed in a loan, excluding interest and fees.
Redraw Facility
A feature that allows you to access any extra repayments you've made on your home loan, providing financial flexibility.
Refinancing
The process of replacing your existing home loan with a new one, typically to secure better rates or features.
Settlement
The final step in the property purchase process where ownership is legally transferred and the loan funds are released.
SMSF (Self-Managed Super Fund)
A private superannuation fund that can be used to invest in property, managed by the fund members themselves.
Split Loan
A home loan divided into portions with different interest rate types (e.g., part fixed, part variable) to balance security and flexibility.
Stamp Duty
A state government tax payable on property purchases, calculated as a percentage of the property's value.
Valuation
A professional assessment of a property's market value, typically required by lenders before approving a home loan.
Variable Rate
An interest rate that can change over time based on market conditions and the lender's discretion.
Need Help Understanding Your Options?
Our experienced mortgage brokers can explain these terms and help you find the perfect financing solution for your needs.