Common phrases used by mortgage brokers

Mortgage brokers can be invaluable when it comes to comparing property loans on your behalf and presenting you with different options.

Here are some of the more commonly used terms by mortgage brokers when discussing loans and their different features:

AAPR, Comparison Rate/Real Rate:

These terms refer to interest rates plus fees and charges rolled into a single percentage rate for ease of comparison.

Amortising Loan:

The most commonly used loan structure, which requires set repayments of principal and interest over a set period of time.

Break Cost:

Fees charged by your lender if you exit your loan early and is most often applied if you have a fixed rate

Bridging Finance:

Helps you "bridge” the gap between the sale of one property and the purchase off another

Capped or Tunnel Loans:

Capped loans limit how high your loan’s limit (both how high and low a rate can go)


Conveyancing is the process of transferring legal ownership of a property from one party to another


The amount of cash you need to contribute towards your loan application

Fixed Rate Loan

A mortgage with interest rates that are locked in for a period of time

Interest Capitalisation

An option to add interest charges to your total loan balance for a limited time, rather than paying it as you go

Introductory/Honeymoon Loan Rate

A mortgage offering a discounted interest rate, for an initial introductory period, before reverting to a higher standard rate.

Lenders Mortgage Insurance

LMI safeguards the lender in case a borrower defaults on their mortgage and is typically required mor loans with an LVR higher than 80%.

Loan to Value Ratio

The size of your loan compared to the value of your property

Mortgage Offset

A saving or transaction account linked to your home loan, which included when calculating interest charges.

Ongoing Fees

Ongoing fees are charged periodically over the life of the loan


A line of credit, typically secured by the equity in your property.

Parental Leave

Some lenders offer a repayment holiday for new parents


An option to pick up your loan and take it with you when you move

Progressive Draw-down

When building a property, funds can be accessed in small sums at various intervals to suit the building process.


The ability to pay extra money into your loan and withdraw it back out if you need it in the future


Taking out a new loan to pay out an old one

Repayment Holiday

A temporary reprieve from loan repayment. For example, if you have lost your income

Revolving Line of Credit

A giant overdraft where money can be borrowed, repaid, then withdrawn again

Salary Loan

A mortgage where your payments can come directly out of pre-tax income from your employer as a salary sacrifice, which can have tax benefits

Split Loans

A loan where interest is charged on part of your balance at a fixed rate and part of your balance is charged at a variable rate.

Stamp Duty

A State government tax on the sale and transfer of land and property

Switching Fees

Costs and charges involved when refinancing from one lender to another

Upfront Fees

Fees charged at the start of your loan to cover the cost of processing your application

Variable Rate Loan

Your lender can raise or lower your interest rate depending on a range of economic factors.


Need a property loan?

Contact us @ propertyloans@realrenta.com






Marlene Liontis
Saturday, 1 February 2020

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