Home Loan Glossary
Demystifying the complex language of mortgages and finance.
A Amortization
The process of paying off a debt over time through regular payments. An amortization schedule shows how each payment is broken down into principal and interest.
C Comparison Rate
A rate that helps you understand the true cost of a loan. It includes the interest rate plus most fees and charges, expressed as a single percentage.
E Equity
The value of your property minus the amount you owe on your home loan. Your equity increases as you pay down your loan or as your property value increases.
L LVR (Loan to Value Ratio)
The percentage of the property's value that you are borrowing. For example, if you borrow $400,000 for a $500,000 property, your LVR is 80%.
O Offset Account
A transaction account linked to your home loan. The balance in the account is 'offset' against your loan balance, so you only pay interest on the difference.
R Redraw Facility
A feature that allows you to withdraw any extra repayments you have made on your home loan. It gives you flexibility to access funds if needed.
R Refinancing
The process of replacing your existing home loan with a new one, either with your current lender or a different one. People often refinance to get a lower interest rate or better features.