Home Loan Glossary

 Additional Payments:

Extra payments made on your home loan account that reduce the interest payable on the loan over time.

Draw Down:

Access available funds. This usually refers to staggered payments on a Construction Loan, or to lines of credit where the borrower has access to funds when they need them.


The value of a property minus the owner’s outstanding loan balance. It is usual for the equity to increase as the outstanding principal of a loan is repaid.

Establishment Fees:

Fees charged by the lender for setting up a loan.

Early Repayment Fees:

Fees payable when a loan is repaid before the end of its term.

Fixed Rate:

An interest rate that does not alter, regardless of any variations in the market’s interest rates for the fixed term.

Interest Only Repayments:

A repayment option in which only the interest accrued on the home loan is paid. This normally converts to Principal and Interest repayments at the end of the Interest Only term.

Investment Property:

A property that the owner does not live in. A property purchased for earning a return on investment.

Lenders Mortgage Insurance:

Lenders Mortgage Insurance protects the lender in the event that a borrower defaults on a loan. It is important to note that it is not mortgage protection insurance that protects a borrower in the event that they are unable to work due to illness or injury, or if the borrower cannot meet the agreed loan commitment.

Line of Credit Loan:

A home loan that gives the borrower credit by using the property as collateral. It’s a revolving line of credit, lending a specified amount and allowing that amount to be borrowed again once it has been repaid.

Owner Occupied:

A property purchased in which the owner lives.

PAYG (Pay As You Go):

The system by which regular payments are made by an individual to the Tax Office to meet income tax and other liabilities.

Portable Loan:

A loan that enables the borrower to move properties without having to refinance, saving on establishment fees.

Principal and Interest Repayments:

A repayment option in which both the amount borrowed and the interest accrued on that amount are repaid over an agreed term.

Redraw Facility:

A facility that allows additional repayments made on a loan to be accessed, or drawn on by the borrower.


To pay off a mortgage and arrange for a new mortgage.

Variable Rate:

An interest rate that may rise and fall, in conjunction with variations in the market’s interest rates.