Clear definitions of key Australian home loans and mortgage overpayment strategies terms. Use this glossary alongside our calculator to understand your results.
The process of paying off a loan through regular repayments over time, with each payment covering both interest and principal.
A fee charged by lenders when a fixed rate loan is paid off early or refinanced before the fixed term ends.
A rate that includes most fees and charges, giving a more accurate picture of the true cost of a loan. Required by Australian law to be displayed alongside the advertised rate.
The act of accessing funds from a home loan or credit facility.
The difference between the current market value of your property and the amount still owed on your mortgage.
An interest rate that remains unchanged for a set period, providing repayment certainty but less flexibility for overpayments.
A benchmark used by Australian lenders to assess living expenses when calculating borrowing capacity.
A loan where repayments cover only the interest charged, with the principal remaining unchanged until the interest-only period ends.
Insurance protecting the lender if you default. Required when borrowing more than 80% of a property's value.
The ratio of your loan amount to the property's value, expressed as a percentage. Lower LVR = better rates.
When investment property expenses (including mortgage interest) exceed rental income, creating a tax-deductible loss.
A transaction account linked to a mortgage where the balance reduces the loan amount on which interest is calculated.
A loan where repayments cover both interest charges and reduction of the loan principal.
A feature allowing borrowers to access extra repayments they have made above the minimum required.
The process of replacing an existing home loan with a new loan, typically to access a better interest rate or features.
A lender's assessment of a borrower's ability to meet loan repayments under current and potential future conditions.
A home loan divided into both fixed and variable rate portions to balance rate certainty with flexibility.
An interest rate that can change at any time, typically in response to RBA cash rate movements.
Now that you understand the terminology, use our free Mortgage Overpayment Calculator to calculate your results. All terms above appear throughout the calculator and our guides.
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