Navigating finance shouldn’t feel like learning a new language. This glossary is designed to keep things simple, clear and seriously helpful – because whatever your ambition, we’re here to help you make it yours.
Term | Definition |
Asset | Something valuable you own (like a car or property)that can act as security to help you unlock the loan you need. |
Basic variable rate loans | These loan types carry cheaper rates and are suitable for first-home buyers who want to save more money. They are the no-frills loan option with fewer features than other loan packages. |
Budget | A clear look at your money to see exactly what you have spare to reach your goals. |
Business loan | Money you borrow to take your business to the next level. |
Bridging finance | You can use this short-term loan to cover the gap between buying a new property and selling your current one |
Capital | Wealth in the form of money or other assets owned by you or your company. |
Capital gain | The profit from the sale of your property or investment. |
Commercial loan | Money borrowed to fund large capital expenditures and or operations that a business may otherwise be unable to afford. |
Commercial property | Property that produces a financial return in the form of rent to the owner, usually by being occupied by businesses. |
Comparison rate | A figure that rolls the base interest rate and most standard lender fees into one single percentage. This rate helps you spot the true cost of a loan so a bank cannot hide high ongoing fees behind a deceptively low advertised interest rate. |
Conditional agreement | A sale and purchase agreement with conditions that must be met before everything becomes final. Both the buyer and the seller can put conditions in the agreement. Buyers often ask for conditions about checking the Certificate of Title, and getting finance or a builder’s report. |
Construction lending | Money that is loaned, where the proceeds are used to finance construction on your land or property. |
Credit history | Your financial track record that shows lenders you’re a reliable borrower who handles repayments well. |
Credit limit | The capped amount your lender has allowed you to spend via a credit card, with your spending limitation based on the information in your initial application. |
Credit rating | An estimate of the ability of a person or business to fulfil their financial commitments, based on previous dealings or on their credit history. |
Debt consolidation | Merging your debt into one amount to simplify your repayments. |
Debt-to-Income Ratio (DTI) | This ratio compares the amount of debt you have to your overall household income, allowing lenders to measure your ability to pay back the money you plan to borrow..
Broker Insight: Think of DTI as your “borrowing ceiling”. Lenders use this to ensure you aren’t overstretching, so keeping other debts (like credit cards) low before applying can really boost your potential. |
Deposit | A lump sum of money used to secure the purchase of an item or a sum that you put in a bank account. |
Equity | Think of equity as your property”s “hidden” value. It’s the difference between what your home is worth and what you still owe the bank. As you pay down your loan or the property market grows, this equity builds up. It’s a powerful tool you can use later to renovate, invest, or reach your next financial goal. |
Family equity loan | Where a family pledge a (limited) security guarantee in the form of an asset or property to help you purchase a home without them actually giving you any money towards the deposit. |
Fixed interest rate | A set percentage against the amount of money you borrow that you repay as a fee. You pay the same instalments over the course of an agreed amount of time. |
Guarantor | A family member who uses the equity in their own property to secure a portion of your home loan deposit. This strategy could potentially help you buy a home sooner and completely avoid paying Lenders Mortgage Insurance even if you have a small deposit. |
Interest only loans | You pay only the interest on the loan, with the principal balance unchanged. |
Interest rate | The fee for borrowing money; Loan Market brokers can help you find the most competitive rate to keep more money in your pocket. |
Investment loan | A loan specifically for investment purposes. |
Lenders mortgage insurance (LMI) | An insurance premium that can help you get into your own home sooner if you have a smaller deposit. This typically applies if your deposit is less than 20%. |
Limited guarantor loan | When another person or family member (usually your parents) guarantees a portion of your loan. |
Line of credit | Drawn from the equity in your property or an agreed amount that your lender has approved. This means you can use just a portion of what you borrowed, and so you only pay interest on money actually withdrawn or used. |
Loan Market | Loan Market takes the stress out of borrowing by doing all the legwork to compare thousands of options from over 100 lenders, ensuring you secure the right loan tailored perfectly to your budget and lifestyle. |
Loan portability | This is a feature that is sometimes offered by lenders to allow you to carry the terms of the loan to a new property if you decide to move house during the life of your loan. |
Loan to value ratio (LVR) | The size of your home loan in comparison to the value of your property. Broker Insight: LVR is the magic number for interest rates. Staying under 80% usually unlocks the very best deals and lets you skip LMI entirely. |
Low doc loan | Designed for self-employed borrowers or those with irregular income. This loan lets you confirm your ability to make repayments with a declaration from yourself and your accountant, skipping the mountain of paperwork so you can secure the funding you need, sooner. |
Lump sum repayments | A single, large sum of money paid toward your loan amount on top of your regular instalments. |
Negative gearing | A tax advantage calculated as a return from an investment property after maintenance and mortgage interest costs. |
Offset account | A clever account linked to your loan where every dollar stops interest from being charged, potentially shaving years off your mortgage. Broker Insight: Every dollar in your offset works like a repayment you can take back! It’s the ultimate tool for flexibility while still crushing your debt. |
Parental guarantee | When your parents or other family members help you secure a loan in your name by offering to use the equity in their home for some or all of your loan. |
Personal loan | A smaller amount of money borrowed to pay for things like holidays, weddings, cars and medical procedures. |
Pest and building inspections | An inspection that protects you from nasty surprises by identifying structural issues before you commit. |
Pre-approval | Gives you a clear budget when attending auctions, showing sellers you’re serious and ready to buy. Also known as conditional approval, this is a conditional offer from a lender stating how much money they are willing to let you borrow based on an initial assessment of your finances. |
Principal | The actual sum that you have borrowed. |
Principal and interest | Your regular repayments cover both the money you borrowed and the interest, meaning you’re actively paying down your debt. It’s the reliable way to build real equity in your property over time, rather than just paying interest. |
Redraw facility | Think of this as a smart safety net. By making extra repayments, you chip away at your interest costs, but if life throws a curveball, you can easily pull that extra cash back out when you need it. |
Refinancing | We help you look at your current loan to see if you could be getting a better rate or features that fit your life better today. It’s often a smart move if interest rates are on the rise to clear debt faster or free up equity for your next big goal. |
Renovation loans | A sum of money borrowed as a short-term loan to pay for maintenance or structural changes to your property. |
Reverse mortgage | When retirees unlock the equity in their home to borrow against the value of their home and repay the loan when they sell their property. |
Self-managed superannuation fund (SMSF) loan | A specialist loan designed to let your self-managed super fund invest directly in property. It’s a powerful way to grow your retirement nest egg, and we’re here to help you navigate the unique lending rules to make it happen. |
Serviceability | Think of this as a “financial health check.” It’s how lenders make sure that if life throws a curveball or rates change, you can still comfortably manage your mortgage repayments. It’s not just about the numbers -it’s about ensuring your loan is sustainable for your lifestyle now and in the future. |
Settlement date | Woo hoo. The big day when you pay the final amount, and the keys to your new property finally become yours. |
Split loan | Allows you to borrow part of your mortgage on a fixed interest rate and the remainder on a variable interest rate, all under the one loan product. |
Stamp duty | A one-off tax charged by your State Government when you buy a property. It’s calculated based on the purchase price, so we always recommend factoring this in early when planning your budget to avoid any surprises. |
Standard variable rate loans (SVR) | The “all-rounder” loan that gives you the freedom to manage your loan in a way that suits your changing life. These come with a full suite of flexible features, like the ability to make extra repayments, access a redraw facility or link an offset account. |
Vacant land loan | A loan to pay for a block of land that you intend to build on in the near or distant future. |
Variable interest rate | Interest charged against the amount borrowed, to be paid at regular instalments, which may increase or decrease according to the cash rate. |
Let us know what your goals are and we will connect you with a Loan Market broker directly.
Find a broker close to you, or set up a video call at a time that suits you.
