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The lending glossary.

42 terms lenders use and borrowers are expected to know, each defined in one sentence first and explained on its own page, with the tool that puts it to work.

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Definitions are general and current at September 2026. Lender policies and government schedules change; the pages say where to check.

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Home loans

LVR (loan to value ratio): LVR is the loan amount divided by the lender's valuation of the property, expressed as a percentage; an $800,000 loan on a $1,000,000 valuation is an 80% LVR.
Lenders mortgage insurance (LMI): Lenders mortgage insurance protects the lender, not the borrower, against loss; a borrower may be required to pay a premium when borrowing above about 80% of the property's value.
Serviceability: Serviceability is a lender's test of whether your income can meet the proposed repayments after tax, living expenses and existing debts, assessed at a rate higher than the one you will pay.
Assessment rate and serviceability buffer: The assessment rate is the interest rate a lender uses to test whether a borrower could meet repayments at a higher rate than the loan's actual rate.
Refinance: Refinancing replaces an existing loan with a new one, with the same lender or a different one, to change the rate, the structure, the lender or the amount borrowed.
Repricing: Repricing is asking your current lender to reduce the rate on your existing loan, without a new application, usually by showing that you could move to a competing offer.
Equity and equity release: Equity is the difference between what a property is worth and what is owed on it; equity release borrows against it, usually up to a total of 80% of the valuation including the existing loan, for a deposit, a renovation or an investment.
Debt consolidation: Debt consolidation refinances several debts, such as credit cards, car and personal loans, into one loan with a single repayment.

Rates and structure

Comparison rate: A comparison rate combines the interest rate and most fees into a single percentage, based on a specified loan amount and term, to help compare loan costs.
Offset account: An offset account is a transaction account linked to a variable loan; the balance is subtracted from the loan balance before interest is calculated each day.
Redraw: Redraw lets you take back extra repayments you have made ahead of schedule, subject to the lender's conditions.
Fixed rate: A fixed rate holds the interest rate and repayment constant for a set period, usually one to five years, after which the loan reverts to a variable rate.
Variable rate: A variable rate can move at the lender's discretion, usually following the cash rate but not bound to it, and the repayment moves with it.
Split loan: A split loan divides one debt into two or more portions, commonly part fixed and part variable, so certainty and flexibility are held at the same time.
Interest-only repayments: Interest-only repayments cover the interest on a loan rather than reducing its principal, for an agreed period, usually one to five years.
Principal and interest repayments: Principal and interest repayments repay part of the balance as well as the interest each period, so the loan is cleared by the end of its term.
Break cost: A break cost is the amount a lender may charge when a fixed rate loan is repaid, refinanced or switched before the fixed term ends, reflecting the lender's loss on the funding it locked in.
Revert rate: The revert rate is the variable rate a loan moves to when its fixed term or introductory period ends, set by the lender and often higher than the rates it offers new customers.

Buying and settlement

Pre-approval (conditional approval): A pre-approval is a lender's written indication of how much it would lend you, subject to conditions such as a satisfactory valuation and unchanged circumstances; it is not a guarantee of finance.
Guarantor and family guarantee: A guarantor, usually a parent, offers their own property as additional security, which can let a buyer borrow with a small deposit without paying lenders mortgage insurance.
Deposit and genuine savings: Genuine savings are funds a borrower has held or accumulated over time, usually at least three months, which many lenders require to make up at least 5% of the purchase price when the loan is above 80% LVR.
Stamp duty (transfer duty): Stamp duty, now called transfer duty in most states, is a state tax on the transfer of property, paid by the buyer at or before settlement and calculated on the price or market value, whichever is higher.
Settlement: Settlement is the day the balance of the purchase price is paid, the title transfers to the buyer and the lender's mortgage is registered; in Victoria most settlements are completed electronically.
Bridging loan: A bridging loan funds the purchase of a new home before the existing one is sold, with the combined debt carried for a limited period, typically six to twelve months, until the sale clears it.
Construction loan and progress payments: A construction loan is drawn in stages as a build progresses, with the lender paying the builder at each stage (slab, frame, lock-up, fixing, completion) against a fixed price building contract.

Specialist and self-employed

Low doc and alt doc loans: A low doc (or alternative documentation) loan assesses a self-employed borrower's income from documents other than two years of tax returns, such as BAS, business bank statements or an accountant's declaration; it is never a loan without an assessment.
Add-backs: Add-backs are expenses a lender may add back to a business's taxable profit when assessing a self-employed borrower's income, such as depreciation, accepted one-off costs and interest on debts being refinanced.
SMSF limited recourse borrowing arrangement (LRBA): A limited recourse borrowing arrangement allows a self-managed super fund to borrow to acquire eligible property held in a separate holding trust, with the lender's recourse against the fund limited to that property.
Business real property: Business real property is real estate used wholly and exclusively in a business; it is the one kind of property a self-managed super fund may buy from, or lease to, a related party such as the members' own company.

Business and commercial

Commercial property loan: A commercial property loan finances an office, retail, industrial or mixed-use property, whether owner-occupied by a business or held for investment, and is assessed on the property's income and the borrower's business as well as the security.
Equipment and asset finance: Equipment finance funds vehicles, machinery, plant and technology for a business, secured on the asset itself, through a chattel mortgage, a lease or a hire purchase agreement.
Working capital and cash flow finance: Working capital finance covers the gap between paying suppliers and staff and being paid by customers, through overdrafts, trade finance, invoice finance or short-term business loans.

Development and private lending

Gross realisation value (GRV): Gross realisation value is the total expected sale proceeds of a development, including GST, as assessed by a valuer; development lenders size their loans as a percentage of it and of total development cost.
Total development cost (TDC) and loan to cost: Total development cost is everything a project costs to complete and sell: land and acquisition, construction and contingency, professional fees, authority contributions, finance costs, selling costs and GST. Loan to cost is the debt as a percentage of it.
Presales: Presales are contracts to buy units in a development before or during construction; lenders set conditions on which contracts count towards any presale requirement.
Private lending: Private lending is finance from non-bank sources, such as funds, family offices and private investors, secured on property, with terms set lender by lender.
Caveat loan: A caveat loan is short-term finance under which the lender lodges a caveat over a property the borrower already owns; a caveat records a claimed interest in the land and is not itself a mortgage, so the lender's security depends on the underlying loan documents.
Second mortgage: A second mortgage is registered security that ranks behind an existing first mortgage on the same property, giving the second lender recourse to the equity above the first lender's debt.
Mezzanine finance: Mezzanine finance sits between senior debt and the developer's equity in a development and may be secured by a second-ranking mortgage or an interest in the project.

Who does what

Credit representative and credit licensee: A credit representative is a person authorised by the holder of an Australian Credit Licence to provide credit assistance on the licensee's behalf; the licensee is responsible for the representative's conduct.
Credit Guide: A Credit Guide is the document a credit licensee or representative must give you before providing credit assistance, setting out who they are, how they are paid, the lenders they commonly use, and how to complain.
AFCA (Australian Financial Complaints Authority): AFCA is the external dispute resolution scheme for complaints about financial firms, including credit licensees and their representatives, available free to consumers after the firm's own complaints process has been used.

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The Learn section is general information about lending in Australia. It does not take account of your objectives, financial situation or needs, is not credit assistance, and is not tax, legal or financial advice. Lender policies, government schedules and regulations change; check the current position with the relevant body or with us before relying on it.