The Mortgage Glossary

The money or assets a person or business owns and puts to use, as distinct from money that is borrowed.

The tax treatment that applies when an asset is disposed of for a gain. It is not a separate tax in Australia: a net capital gain is included in assessable income for the year and taxed at the taxpayer’s rate.

The increase in an asset’s value over time, as distinct from the income it produces.

The benchmark interest rate set by the Reserve Bank of Australia. Movements in the cash rate flow through to variable home-loan rates.

A financial statement that summarises money coming in and going out over a specific past period.

Government benefit payments from Centrelink (Services Australia). Some can be used to service a home loan, usually alongside other income and evidenced by a Centrelink statement.

A reversal of a card transaction back to the customer, often started by their bank when goods or services were not delivered as agreed.

A person who borrows jointly with another. Each borrower is fully responsible for the whole loan, so if one does not pay, the other must.

Income paid as a percentage of sales. Usually averaged over one to two years and evidenced by payslips and tax returns.

A rate that includes both the actual interest rate and the upfront and ongoing loan fees, expressed as a single percentage. For home loans it is calculated on a prescribed reference loan of $150,000 over a 25-year term, so it is a like-for-like comparison rather than a quote for any particular loan. Under the National Consumer Credit Protection Act 2009, comparison rates must be displayed when a regulated loan's interest rate is advertised.

Interest charged on both the original principal and the interest already added, so debts (and savings) grow faster over time.

Before-tax contributions, including the employer SG and salary-sacrifice amounts, taxed at 15% in the fund and counted against the annual concessional cap. The cap is indexed and is $32,500 for 2026-27.

Refers to building on vacant land, a house and land package, or property additions or major renovations.

The state-based Uniform Consumer Credit Code that regulated consumer lending until 1 July 2010, when it was replaced nationally by the National Credit Code under the NCCP Act.

Inflation is the general rise in prices over time; the CPI is the main measure of it. Rising inflation often leads to higher interest rates.

A solicitor or licensed conveyancer who acts for a buyer or seller through the property transfer process.

The former Credit Ombudsman Service, an external dispute resolution scheme now part of the Australian Financial Complaints Authority (AFCA).

The document setting out a loan’s terms: the amount, term, interest rate, fees and repayments. The lender must provide it.

A disclosure document a broker or lender must give a client when providing credit assistance, early in the process. It sets out their licence and contact details, the lenders they use, any fees, and their dispute resolution scheme.

A document a broker must give a client before charging them a fee for credit assistance, setting out the maximum fee payable and how it is worked out. Separate from the Credit Guide and the credit proposal disclosure.

The record a credit reporting body holds on a person: their credit score, the enquiries lenders have made, current and closed credit accounts, monthly repayment history, defaults, judgments, and any bankruptcy or debt agreement. Lenders read it before deciding whether to lend.

The gain made when an asset sells for more than it cost. Such gains may be taxable.

A variable rate loan with a ceiling: the rate can fall but cannot rise above a set cap for a period.

A lump sum a lender pays a borrower for taking out or refinancing a loan with them, usually on conditions and clawed back if the loan is repaid early.

Income from casual employment. Lenders usually want a minimum time in the role (often 6 to 12 months) and average the income.

Proof from an insurer that a building is insured, naming the lender as an interested party. Lenders ask for it before settlement.

Regular payments from a former partner for a child’s support. Lenders may count it, usually only alongside PAYG or self-employed income, and typically require a court order or Services Australia letter plus about three months of receipts.

An item of value that a lender accepts as security for a loan. This means the lender can seize the asset if the borrower fails to repay the loan according to the agreed terms.

Property used for business purposes (office, retail, industrial and similar), and the loans used to buy it. Whether consumer credit law applies turns on the borrower and the purpose of the credit rather than on the type of security, and commercial loans are generally assessed on the property’s income and the borrower’s business rather than personal serviceability alone.

Recent sales of similar nearby properties that a valuer relies on to form an opinion of value. Where comparable sales are scarce, valuations tend to come back conservative.

The Australian system where lenders share positive and negative credit information (including repayment history), giving a fuller picture of a borrower’s credit behaviour.

Conditions that must be achieved before a loan or formal loan approval can be provided.

A situation where someone in a position of trust has competing interests that could stop them being impartial. Managing conflicts is central to the Best Interests Duty.

A lender that offers construction (progress-payment) loans, releasing funds in stages as a build reaches each milestone. See Construction loan.

Insurance that helps cover loan repayments if the borrower cannot work because of illness, injury, disability or unemployment.

Process of transferring ownership of a property from one party to another.

A short window after contracts are exchanged in which a buyer can withdraw from a private-treaty purchase, usually by giving written notice and forfeiting a small percentage of the price. The length of the window and the cost of using it are set by state law and differ between states, and it generally does not apply to a purchase at auction.

A binding condition placed on the property title that provides specific restrictions in relation to the property.

The record left on a credit file when a credit provider accesses credit reporting information in connection with a credit application the person has made. Enquiries stay for five years, and several in a short period can read as distress to the next lender.

The maximum amount of funds that can be advanced to the borrower.

An assessment of a person’s creditworthiness based on their borrowing and repayment history, held by one of the credit reporting bodies licensed to operate in Australia. See Credit score.

A person or business authorised to engage in credit activities under someone else’s Australian credit licence, registered with ASIC. Most brokers operate this way rather than holding a licence of their own.

Cash withdrawn against a credit card. Usually charged a fee plus interest from the day it is taken, with no interest-free period.

A financial forecast that details the expected monetary inflows and outgoings of a business over a certain period.

A notice recorded on a land title by a person claiming a legal or equitable interest in the property, which can stop further dealings with the title until it is resolved or withdrawn.

The record of who owns a parcel of land and what interests are registered over it, held in the state or territory land register. Paper certificates have been abolished in most jurisdictions, NSW included from 11 October 2021, so the register itself is now the title.

Where a lender reclaims some or all of the upfront commission it paid a broker because the loan is repaid, refinanced or discharged soon after settlement, usually within the first 12 to 24 months.

Law developed by the courts through past decisions, as distinct from law made by parliament.

A property title where several dwellings are erected on an estate and the owners own their property and land on freehold title but have shared access to community facilities (such as a pool, barbecue area or tennis court). All owners pay levies for the upkeep of the community facilities. Community title laws differ between states.

A type of ownership for a unit, flat or apartment in a building owned by a company. A purchaser buys certain shares in the company, which gives the purchaser the right to occupy a specific unit, flat or apartment.

Broad cover, for example car insurance that covers damage to the insured’s own vehicle as well as to other people’s property.

A loan specifically for the purpose of funding the building of a new dwelling. Can also apply to major renovations of an existing property. Funds are usually drawn down in stages as building progresses.

An agreement to rent an item such as a laptop, television or fridge for a set time. The renter does not own it at the end, and the total paid can be far more than buying outright.

Cover for the contents of a home, including for renters.

A written agreement outlining the terms and conditions of the sale.

A card giving access to a revolving line of credit up to a set limit. The limit (not just the balance) counts as a liability in serviceability, so unused cards can reduce borrowing power.

The record a credit reporting body keeps of a person’s credit history: applications, repayments, defaults and current accounts. Lenders check it before deciding whether to lend.

A document the broker must give the client when providing credit assistance, setting out the commissions expected on the recommended loan and any fees payable. Required under the NCCP Act, with its own timing separate from the Credit Guide.

A check a lender makes with a credit reporting body on an applicant’s credit history before lending. Credit reporting bodies hold both consumer and commercial credit histories.

A numerical representation of an individual’s credit rating calculated using the information contained in the credit report. Different credit reporting agencies use different rating scales.

A party to whom money is owed.

Where more than one property is used as security for a loan or loans, so the lender holds security over all of them.

The trustee of the bare trust in an SMSF borrowing arrangement, holding the property on the fund’s behalf. Usually a company set up for that purpose alone.