Home loan glossary

Confused by some of the financial speak about mortgages and government jargon around home buying? You’re not alone. That’s why we’ve put together a list of the more common terms you’ll come across – and what they really mean.

Guide to mortgage and home buying jargon

Bridging finance

A short term home loan to finance the purchase of your new property, before you sell your existing property.

Capital growth (also known as capital appreciation)

An increase in the value of your property over time.

Comparison rate

It’s a tool that can help you identify the truer cost of a loan. It’s calculated using a standard formula that includes the interest rate, as well as certain fees and charges relating to a loan (not all fees and charges are included).

Conditional approval

A document from your lender that states how much they’re likely to let you borrow based on a review of your financial situation, objectives and requirements, and it’s subject to terms and conditions.

Construction loan

A loan specifically for building or renovating. These loans are based on construction progress and draw down in stages. Instead of receiving the loan in a lump sum, like you would for a home loan, the loan funds are released as the building or renovation progresses. See more about how they work.

Conveyancing

The process of transferring a property from one owner to the next. You’ll need a lawyer or licensed conveyancer to do this for you. They’ll make sure all outstanding bills, like water and land rates, are paid up in full by the existing owner before you settle.

Depreciation

A reduction in the value of your property over time due to wear and tear.

Discharge

If you’re refinancing, a discharge is when we remove your current lender’s name off your property title and replace it with Bankwest.

Equity

The difference between your property’s market value and what you owe on your home loan.

Family Guarantee

A helping hand from an immediate relative who agrees to be your home loan guarantor. This means they agree to provide their property as additional security for your home loan, allowing you to buy your new home sooner. Find out more about our Family Guarantee option.

First Home Owner Grant (FHOG)

A one-off government grant to help pay for the costs of buying your first home. You may be eligible for it if the property you’re buying is a new build or brand new house never lived in. Your Home Finance Manager can give you the latest information.

Fixed interest rate

An interest rate that stays the same for a set period. If you have a home loan with a fixed interest rate, your repayments won’t change during that set period. Find out more about fixed rate home loans.

Guarantor

An immediate relative who agrees to provide their property as additional security for your home loan.

Home Buyers Assistance Account (HBAA, previously known as the REBA grant)

If you’re buying your first home in WA and it meets the HBBA grant criteria – and you’re buying from a licensed real estate agent – you could be eligible to receive a grant to go towards the costs of buying your home.

Interest only repayments

Your mortgage repayments are limited to just the interest for an agreed period of time. Find out more.

Lenders Mortgage Insurance (LMI)

Commonly mistaken as a home insurance policy, LMI is insurance to protect your lender if you have trouble with your mortgage repayments in the future. You can pay LMI as an additional upfront cost when you buy a home or, depending on how much LMI you have to pay, it may be added to your home loan amount. You can usually avoid LMI if you save a deposit of at least 20% of your property’s value.

Loan to value ratio (LVR)

The total percentage of your property value that you’ve borrowed. For example, if your property is worth $400,000 and you’ve borrowed $320,000, your LVR is 80%. Find out more about LVR.

Offset facility

A feature of an offset transaction account  that helps you save on home loan interest. Here’s how. The balance in your offset account is ‘offset’ against the amount you owe on your home loan. The interest you pay on your home loan is calculated on this reduced amount.

100% offset means the balance of your home loan on which interest is calculated is reduced by the full amount (100%) of money you have in your offset account. You can offset up to the full amount of your home loan.

40% offset means the balance of your home loan on which interest is calculated is reduced by 40% of the money you have in your offset account. You can offset up to 40% of your home loan amount.

Principal and interest repayments

Your repayments are both the loan amount (the principal) and the interest on that loan. Find out more.

Progress payment

Payments made from your construction loan to your builder when you’re building or renovating. The loan funds draw down in stages as the building work progresses.

Refinancing

Moving your home loan from one lender to another. See more about what it means to refinance.

Redraw facility

A home loan feature that lets you make extra mortgage repayments and take them back out if you need. See more about how redraw works.

Rentvesting

A popular term used to describe buying an investment property while living in a rental property. Find out more about what to consider when rentvesting.

Repayment holiday

Taking a break from making your scheduled mortgage repayments if your loan is in surplus. Find out more about taking a repayment holiday.

Reverse mortgage

Lets you borrow money using the equity you’ve built up in your home as security. See more about reverse mortgages and our Seniors Equity Release Home Loan.

Settlement

The legal process of transferring ownership of a property from seller to buyer.

Split loan 

In most cases, this is where one home loan portion is on a fixed rate and the other is variable rate. Find out more about types of home loans.

Stamp duty

A tax levied by state and territory governments when a property is sold, and likely your biggest upfront cost when you buy a property (aside from your deposit). See our guide to upfront home buying costs.

Standard variable rate

The standard variable rate (or SVR, as it’s more commonly known) is the standard home loan rate charged by the lender. It’s normally used as a benchmark rate from which other variable products are priced.

Surplus

The money that’s built up from making extra mortgage repayments.

Unconditional approval

This is confirmation that your lender has approved your full home loan application and will lend you the money.

Variable interest rate

An interest rate that can go up and down over time. If you have a home loan with a variable interest rate, your repayments can change. Find out more about variable rate home loans.

Find a home loan to suit you

Browse our range of home loans.

Equaliser Home Loan

A home loan rate lower than the average standard variable rates of ANZ, NAB and Westpac for the first three years.

Complete Home Loan Package

A Complete home loan, eligible credit card and offset account for one annual package fee. Variable and fixed loan options available.

Variable Rate Home Loan

Offering our discounted variable rate, the Premium Select Home Loan currently has a $0 application fee.

Fixed Rate Home Loan

Lock in your interest rate for one to five years.

Seniors Equity Release

Unlock the equity in your home and make no repayments for the life of the loan.

Ask an expert 

Get in touch with one of our Home Finance Managers, and they'll respond within one business day. 

Things you should know 

The information contained in this article is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this article without first obtaining specific professional advice. Also to the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit licence 234945, its related bodies corporate, employees and contractors accept no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this article.