A plain-English glossary.

Amortisation: the gradual repayment of a loan through scheduled principal and interest payments over time.

ACL / Credit Rep: Australian Credit Licence, or a Credit Representative number issued under a licensee's ACL. Any brokerage providing consumer credit services must hold a licence or operate under one.

Bridging finance: a short-term loan facility that covers the gap between buying a new property and selling an existing one. See bridging finance.

Comparison rate: a rate that includes the effect of some fees and charges as well as the interest rate. It's imperfect, but more representative than the headline rate alone.

Discharge fee: a fee the outgoing lender charges to close out a mortgage when you refinance or pay it out.

Equity: the difference between your property's current value and the balance of the loan secured against it.

FHOG: First Home Owner Grant. A government grant for first home buyers of newly built property. Rules and amounts vary by state.

Fixed rate: an interest rate locked in for a set period (typically 1 to 5 years), after which the loan reverts to a variable rate.

Guarantor: a family member who pledges equity in their own property as additional security for your loan. See guarantor loans.

Interest only (IO): a loan where you pay only the interest, not the principal, for a set period. See interest only.

LMI: Lenders Mortgage Insurance. A one-off premium charged when the LVR exceeds 80%. See low deposit & LMI.

LRBA: Limited Recourse Borrowing Arrangement. The required loan structure for SMSF borrowing. See SMSF loans.

LVR: Loan to Value Ratio. The loan amount expressed as a percentage of the property's value.

Offset account: a transaction account linked to your mortgage. The balance reduces the interest you pay on the loan without paying down the principal.

Pre-approval: a formal, credit-checked position from a lender indicating the amount you can borrow, subject to the specific property. See pre-approval.

Principal and interest (P&I): a loan where each payment reduces both the interest and the principal balance.

Redraw: a feature that lets you access extra repayments you've made on a loan.

Refinance: replacing an existing loan with a new loan, usually at a different lender or structure. See refinancing.

Serviceability: the lender's assessment of whether you can afford the loan, based on your income, expenses and existing debts.

Split loan: a loan divided into portions with different rate types (e.g., part fixed, part variable) or purposes.

Stamp duty: a state government tax on property transfers. It varies by state and buyer profile. Use the VIC calculator.

Variable rate: an interest rate that moves with market conditions and lender pricing decisions.