Mortgage broker reference · Glossary
Australian mortgage glossary: 71 home loan terms defined
Plain-English definitions for every term you will encounter from pre-approval through to settlement. AU-specific context, regulator names, and links to the deeper guides. Bookmarked by enough property-purchase clients that we keep it as a standing reference.
★Key takeaways
- ✓60+ AU mortgage and property finance terms — grouped by Loan structure, Costs, First home buyer, Regulators + bodies, Process, and Specialist.
- ✓AU-specific context for every term — regulator names (ASIC, APRA, AFCA, MFAA, FBAA), local schemes (FHG, FHOG, FHSSS), state-specific instruments (Section 32, cooling off rules).
- ✓Schema.org DefinedTermSet emitted so AI engines and SERP features can surface definitions directly. Use this page as the link target for explainer references across the site.
- ✓Best Interests Duty (BID) is the key consumer-protection regulation for mortgage brokers since 2021. ASIC enforces; AFCA handles complaints.
- ✓When in doubt, check the regulator: ASIC for credit licences, APRA for bank prudential settings, AFCA for complaints, RBA for cash rate, Housing Australia for federal FHB schemes.
Glossary
Loan structure
LVR (Loan-to-Value Ratio)
The loan amount expressed as a percentage of the property value (or contract price, whichever is lower). $400k loan on a $500k property = 80% LVR. Lenders price tier rates by LVR — below 60%, 60-80%, 80-90%, 90%+. LVR above 80% typically requires LMI.
LMI (Lenders Mortgage Insurance)
One-off insurance premium paid by the borrower that protects the LENDER if you default. Required when LVR exceeds 80%. See our /lmi-calculator/. Provided in AU by Helia (formerly Genworth), QBE LMI, and a few lender-internal schemes.
P&I (Principal and Interest)
Standard repayment structure — each monthly payment reduces the principal as well as covering interest. Loan balance falls to zero over the loan term (typically 25-30 years).
IO (Interest Only)
Repayment structure where you pay only the interest for an initial period (typically 1-5 years), with no principal reduction. Lower monthly repayment but loan balance does not fall. Common for investment property loans for tax reasons. Reverts to P&I at end of IO period.
Offset account
A transaction account linked to your home loan. Balance offsets the loan principal for interest calculation. $50k offset on $500k loan: interest charged on $450k. Standard on variable loans, rare on fixed loans.
Redraw
Ability to withdraw extra repayments you have previously made. Money sits in the loan, not a separate account. Less flexible than offset (some lenders limit redraw frequency or block during arrears).
Comparison rate
Standardised rate that combines the interest rate with most fees (establishment fee, monthly fees, package fees) into a single percentage. Lets you compare loans like-for-like. Required by NCCP to be displayed prominently. Based on a $150k loan over 25 years — your actual comparison rate may differ at larger loan sizes.
Variable rate
Interest rate that can change at any time, typically driven by RBA cash rate movements and lender pricing decisions. Most AU borrowers have variable. Pros: flexibility, offset, uncapped extras. Cons: repayment can rise.
Fixed rate
Interest rate locked for a specified term (1-5 years typically). Pros: repayment certainty. Cons: capped extras, usually no offset, break costs if exited early. See /fixed-vs-variable/.
Split loan
A loan structured in two parts — typically a variable portion and a fixed portion. Combines flexibility of variable (offset, extras) with certainty of fixed (locked rate on bulk of loan). Standard recommendation from experienced brokers for borrowers with stable income.
Bridging finance
Short-term loan that bridges the gap between buying a new property and selling your existing one. Interest is usually capitalised for 6-12 months until the existing property sells. Used to avoid forced sale or chain-of-settlement timing problems.
Construction loan
A loan released in progress payments aligned with construction milestones (slab, frame, lock-up, fixing, completion). Interest charged only on drawn portion. Most major lenders offer; standard for owner-builder or builder-built new homes.
Cross-collateralisation
Using two or more properties as security for one or more loans. Common for investors. Pros: lower deposit needed for next purchase. Cons: harder to refinance one loan independently, complicates sale of any one property. Many brokers actively recommend AGAINST.
Guarantor loan
A family member (typically parent) uses equity in their property as additional security to top your deposit up to 20%. Removes LMI. Guarantee can be partial (just for the deposit gap) or full. Removable once you reach 80% LVR.
Low-doc loan
Loan with reduced documentation requirements — for self-employed borrowers without 2 years of tax returns. Higher rate (typically 0.5-1.5% above standard) and lower LVR cap (usually 70-80%). Most non-banks offer; major banks have largely retreated.
Non-conforming loan
Loan for borrowers who do not meet standard credit criteria (bad credit history, defaults, complex income, recent bankruptcy). Specialist lenders only, higher rates (typically 2-5% above standard). Used as a step-up loan with intention to refinance to mainstream after 1-2 years.
Glossary
Costs
Stamp duty
State government transfer duty on property purchases. Largest one-off government cost on most AU purchases — typically 3-5% of price. First Home Buyers receive concessions in every state. See /stamp-duty-calculator/.
Discharge fee
Fee charged by your lender to release a mortgage when you refinance, sell, or pay off the loan. Typically $320-$390. Required to be disclosed in the loan contract.
Establishment fee
One-off fee for setting up a new loan with a lender. Range $0-$795. Often waived in 2026 as a refinance incentive. Sometimes labelled "application fee" or "loan approval fee".
Break cost
Penalty charged when you exit a fixed-rate loan before the end of the fixed term. Compensates the lender for the funding cost difference. Formula: balance × rate differential × remaining years. Can range $1,000 to $30,000+. Always get a written quote BEFORE refinancing.
Valuation fee
Fee for a property valuation conducted by an independent valuer engaged by the lender. Typically $0-$300. Often free on refinance, sometimes paid by buyer on purchase. Some lenders offer upfront valuation as part of pre-approval.
Mortgage registration fee
Fee charged by the state Land Titles Office to register the mortgage on the property title. Set by each state. Typically $160-$300. Charged separately on transfer and on mortgage.
Cashback
Marketing incentive from new lender to refinancers — typically $2,000-$4,000 deposited into your account after settlement. Loan size minimums usually apply ($250k-$500k). Reduced from 2022-2023 peak but still common in April 2026.
Glossary
First home buyer
FHB (First Home Buyer)
Defined under each state's First Home Owner Grant Act — generally someone who has not previously owned residential property in Australia. Some schemes use a 10-year rolling definition. See /first-home-buyer-schemes/.
FHG (First Home Guarantee)
Federal scheme administered by Housing Australia. 5% deposit, government guarantees the gap to 20%, no LMI. 50,000 places per year (FY26). Income cap $125k single / $200k combined. Property price caps by location.
RFHBG (Regional First Home Buyer Guarantee)
Sister scheme to FHG for regional buyers. 5% deposit, no LMI. 10,000 places per year. Must have lived in regional area for 12 months before contract.
Family Home Guarantee
Federal scheme for single parents with dependent children. 2% deposit, no LMI. 5,000 places per year. Does NOT need to be a first home purchase — but no current property ownership.
FHOG (First Home Owner Grant)
State government cash grant for first home buyers, mostly restricted to new builds since 2022-23. QLD $30,000 (until 30/06/2025, otherwise $15k), VIC $10k regional only, NSW/WA/TAS/NT $10k, SA $15k, ACT replaced by HBCS. See /first-home-buyer-schemes/.
FHSSS (First Home Super Saver Scheme)
ATO scheme letting first home buyers release up to $50,000 of voluntary super contributions for a deposit. Tax savings ~$5-10k typical for middle-income earners contributing $15k/year for 3-4 years. Must apply for ATO Determination BEFORE signing the property contract.
Help to Buy
Federal shared equity scheme launched mid-2025. Government takes up to 40% equity in property — you only borrow against your share, no LMI required. 10,000 places per year. Income cap $90k single / $120k combined.
HBCS (Home Buyer Concession Scheme)
ACT replacement for FHOG. Full duty discount up to $1m purchase price if household income is below $250k. ACT is phasing out conveyance duty in favour of broad-based land tax.
PPR (Principal Place of Residence)
The property you live in as your main home. Most FHB schemes and concessions require PPR occupancy for at least 6-12 continuous months commencing within 6-12 months of settlement. Investment properties do not qualify.
Glossary
Regulators + bodies
MFAA (Mortgage and Finance Association of Australia)
Largest AU mortgage broking industry body. Members must meet education + ongoing CPD + Code of Practice + dispute resolution standards. Approximately 14,500 members.
FBAA (Finance Brokers Association of Australia)
Second AU mortgage broking industry body. Similar member standards to MFAA. Approximately 6,000 members. Many brokers hold dual MFAA + FBAA membership.
ASIC (Australian Securities and Investments Commission)
Federal corporate, markets and consumer credit regulator. Issues Australian Credit Licences (ACL) under NCCP. Enforces Best Interests Duty for mortgage brokers since 2021. Public registers searchable at asic.gov.au.
APRA (Australian Prudential Regulation Authority)
Federal prudential regulator overseeing banks, insurers and super funds. Sets serviceability buffers (currently 3% above offered rate) and macro-prudential limits on investor and IO lending.
AFCA (Australian Financial Complaints Authority)
Free and independent ombudsman service for AU financial complaints, including mortgage brokers and lenders. Determinations are binding on financial firms up to monetary limits. afca.org.au.
RBA (Reserve Bank of Australia)
AU central bank. Sets the cash rate, the foundation for variable home loan pricing. Cash rate decisions made at monthly Board meetings (first Tuesday Feb-Dec). Statement on Monetary Policy quarterly. rba.gov.au.
Cash rate
The RBA target interest rate for unsecured overnight loans between banks. Lender variable rates roughly track cash rate movements but not 1-for-1 (lenders set their own margin). The headline number in monetary policy reporting.
AHCRA (Australian Home Lending Recovery Act)
Reserved entry — there is no statute by this exact name. Common confusion: the regulatory framework is the National Consumer Credit Protection Act 2009 (NCCP), administered by ASIC.
NCCP (National Consumer Credit Protection Act)
2009 federal legislation governing consumer credit, including home loans and mortgage broking. Requires ACL or authorised representative status, responsible lending obligations, and disclosure requirements. ASIC enforces.
Best Interests Duty (BID)
Legal obligation introduced January 2021 requiring mortgage brokers to act in the consumer's best interest, not the lender paying highest commission. Documented reasoning must support each recommendation. Enforced by ASIC.
FIRB (Foreign Investment Review Board)
Federal body reviewing foreign purchases of AU residential property. Foreign residents typically restricted to new builds, must obtain FIRB approval ($14k-$45k application fee) and pay foreign buyer surcharge stamp duty.
Glossary
Process
Pre-approval
Conditional approval from a lender based on income, expenses, deposit and credit history — BEFORE you find a property. Valid 60-90 days. Allows you to bid at auction or make an offer with confidence. Not a guarantee of final approval.
Unconditional approval
Final loan approval after the property has been valued and all conditions met. Required before settlement. Cannot be revoked except in cases of misrepresentation or material change in circumstances.
Serviceability
Lender assessment of whether you can afford the loan repayments. Income minus living expenses minus existing debts, tested against the proposed loan repayment at the offered rate plus the APRA serviceability buffer (currently 3%).
Serviceability buffer
Extra interest rate added to your actual rate when calculating serviceability. APRA-mandated minimum 3% (lifted from 2.5% in October 2021). $600k loan at 6% is assessed as if you were paying 9%.
Settlement
The day funds change hands and the property title legally transfers. Coordinated by conveyancer / solicitor + lender + outgoing lender. PEXA online settlement standard since 2018.
PEXA (Property Exchange Australia)
Electronic platform used for nearly all AU property settlements. Replaces paper cheques and physical certificate of title transfer. pexa.com.au.
Conveyancing
Legal transfer of property from seller to buyer. Performed by a solicitor or licensed conveyancer. Typical cost $800-$2,500. Compare 2-3 quotes before engaging.
Refinance
Switching your home loan from one lender to another (or to a different product with the same lender) to get a better rate, access equity, consolidate debt, or change features. See /refinance-savings-calculator/.
Glossary
Specialist
Equity
The difference between your property value and your loan balance. $700k property + $400k loan = $300k equity. Usable equity (the part you can borrow against) is typically equity above 20% LVR — in this case ~$160k usable.
Negative gearing
When an investment property loses money on rent + costs vs interest + expenses, the loss reduces your taxable income. Common AU investor strategy. ATO accepts; tax-deductibility of interest is core to the system.
Positive gearing
When rental income exceeds the costs of holding an investment property. Less common in capital cities, more achievable in regional markets or older properties. Profit is taxable.
Capital gains tax (CGT)
Federal tax on the gain when you sell an investment property. 50% discount if held over 12 months for individuals. PPR exempt (the property you actually live in). ATO administers.
Mortgage portability
Ability to transfer your existing loan from one property to another without discharging and re-establishing. Some lenders offer; some do not. Useful when upgrading without selling and re-buying separately.
Lender panel
The set of lenders a mortgage broker is accredited with and can place loans through. Major broker networks have 30-70 lenders. A larger panel does not automatically mean better outcomes — quality of relationships matters more than quantity.
Trail commission
Ongoing commission paid by lenders to mortgage brokers each year the loan remains on the books. Typically 0.10-0.20% of loan balance per year. Disclosed to borrower in writing under NCCP.
Upfront commission
One-off commission paid by the lender to the broker when the loan settles. Typically 0.50-0.70% of loan amount. On a $600k loan: ~$3,500. Disclosed in writing under NCCP.
Clawback
When a borrower discharges or refinances within 2 years, the lender claws back part of the broker's upfront commission. Some brokers pass this on to the customer as a clause in their service agreement.
AFSL (Australian Financial Services Licence)
ASIC-issued licence for providing financial product advice or services. Different from ACL (Australian Credit Licence) which is for credit assistance. Mortgage brokers operate under ACL, not AFSL.
ACL (Australian Credit Licence)
ASIC-issued licence for providing credit assistance, including mortgage broking. Brokers either hold an ACL directly or operate as a Credit Representative of an ACL holder (aggregator).
Aggregator
Service company that holds the ACL, provides software, and connects brokers to the lender panel. Most brokers operate through an aggregator — e.g. AFG, Connective, FAST, PLAN.
Genuine savings
Funds you have saved (not gifted, not from FHOG) over at least 3-6 months. Most lenders require 5%+ of the deposit to be genuine savings as evidence of financial discipline. First Home Guarantee participants can substitute scheme places for this requirement.
Discharge
Formal release of the mortgage from your property title. Triggered when you sell, refinance, or pay off the loan. Discharge fee typically $320-$390. Title clear once discharge lodged with state Land Titles Office.
Recourse vs non-recourse loan
Standard AU home loans are FULL RECOURSE — the lender can pursue you personally if the property sale does not cover the loan balance. Non-recourse loans (where the lender can only claim the property) are rare in AU residential and typically only available for self-managed super fund property purchases.
Vendor finance
When the seller provides financing to the buyer instead of a bank. Rare in residential AU, more common in commercial. Higher rates than bank loans. Used when buyer cannot get bank approval but seller wants to move the property.
Rentvesting
Strategy where you rent where you want to live and buy an investment property in a more affordable area. Common AU first-property strategy when capital cities are unaffordable for owner-occupier purchase. Loses access to FHB schemes (PPR requirement).
Cooling off period
Statutory window after contract exchange during which the buyer can withdraw with limited penalty. Varies by state: NSW 5 business days, VIC 3 business days, QLD 5 business days, WA none, SA 2 business days, TAS none for established homes, ACT 5 business days, NT 4 business days. Does NOT apply to auction purchases.
Contract of sale
The legally binding document setting out the price, terms, and conditions of the property purchase. Once signed by both parties and deposit paid, both parties are committed (subject to cooling off if applicable). Conveyancer reviews before signing.
Section 32 (VIC) / Section 27 (NSW) / Form 1 (SA) / Form 32A (TAS)
State-specific vendor statement disclosing material facts about the property — easements, zoning, building approvals, outgoings. Conveyancer reviews. Failure to disclose can give buyer grounds to terminate.
Where to verify
Primary regulator and body links
Every definition above is general information only. When the answer matters financially, verify against the primary source.
ASIC
Corporate, credit licences, Best Interests Duty enforcement
APRA
Bank prudential standards, serviceability buffer
AFCA
Free financial complaints ombudsman
RBA
Cash rate decisions, Statement on Monetary Policy
MFAA
Largest broker industry body — member directory
FBAA
Second AU broker body — member directory
Housing Australia
FHG, RFHBG, Family Home Guarantee, Help to Buy
ATO
FHSSS, CGT, negative gearing, investor tax rules
FIRB
Foreign investment in AU residential property
Related calculators + guides