Glossary

Bridging finance

This is a type of home insurance for those who own a home or investment property. While the cover can differ depending on the insurer and policy, it’s generally designed to cover the property itself and its permanent fixtures for events like fire, flood, storms and theft. It may also include additional benefits and, in many instances, can be combined with contents insurance.

Building insurance

This is a type of home insurance for those who own a home or investment property. While the cover can differ depending on the insurer and policy, it’s generally designed to cover the property itself and its permanent fixtures for events like fire, flood, storms and theft. It may also include additional benefits and, in many instances, can be combined with contents insurance.

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

This letter indicates the amount you’ll likely be able to borrow following our validation and assessment of the information you’ve given us, plus a credit check. We’ll list the things we still need from you (like a Contract of Sale for your new property) before we can fully approve your loan. A conditional approval letter is what you’d take with you to an auction. It’s different to an approved in principle letter (also known as pre-approval), where your information hasn’t been assessed or validated by us.

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.

Contents insurance

This is a type of home insurance for belongings or items you own in your home, investment property or the property you rent. It’s designed to cover these belongings for events like fire, flood, storms or theft. While the cover can differ depending on the insurer and policy, it generally applies to items like furniture and appliances.

Contents insurance is usually different to portable contents insurance, which is cover for items you generally take or wear outside of the home – but often you can combine these covers. Contents insurance won’t cover you for the building itself, but you can usually combine it with building insurance.

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.

Cross-collateralisation

When multiple properties secure one or more home loans. If you buy a second property, you might want to access any existing equity or reduce your Loan to Value Ratio (LVR), and this is where cross-collateralising can help. If you change a loan or property (like refinancing or selling), it may affect anything that’s cross-collateralised.

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 your current lender’s name is removed off your property title and replaced with your new lender.

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.

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. We 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.

Home loan increase

This is when you increase the limit on your existing home loan. You might increase your limit instead of taking out a personal loan or credit card to avoid paying a higher interest rate.

Interest only repayments

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

Investor loan

Investor loans include (but are not limited to) loans where the predominant part is used to invest in construction or property. For example, an investment home loan is a type of investor loan designed for borrowers to purchase a property for an investment purpose.​

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%.

Offset facility

A feature of an offset 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.

Portable contents insurance

This is a type of home insurance for items you might wear or take away from home, and it’s designed to protect them in the event of accidental loss or damage. It can differ depending on the insurer and policy. You may be able to combine this cover with other types of home insurance, such as contents insurance and building insurance.

Principal and interest repayments

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

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.

Redraw facility

A home loan feature that lets you make extra mortgage repayments and take them back out if you need.

Rentvesting

A popular term used to describe buying an investment property while living in a rental property.

Repayment holiday

Taking a break from making your scheduled mortgage repayments if your loan is in surplus.

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.

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).

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.