Bookmark this. Every term below gets a plain-English explanation — no circular definitions, no "see clause 14b".
The big four
LVR (loan-to-value ratio). Your loan as a percentage of the property's value. $480,000 loan on a $600,000 home = 80% LVR. It's the number lenders care about most: at or under 80% you skip LMI and get better rates.
LMI (Lenders Mortgage Insurance). A one-off premium — often $10,000+ — you pay when your deposit is under 20%. It protects the lender if you default, not you. Avoid it with a 20% deposit, the 5% Deposit Scheme, or a family guarantee.
Offset account. An everyday bank account linked to your loan. Every dollar in it "offsets" your balance daily — $20,000 in offset against a $500,000 loan means you pay interest on $480,000. Your money stays fully accessible.
Comparison rate. The advertised rate with standard fees folded in, calculated on a government-mandated formula so lenders can't hide costs behind a low headline number. Always compare loans on this, not the headline rate.
Getting a loan
Pre-approval. A lender's conditional yes to an amount before you've found a property. It defines your budget, lasts about 90 days, and makes your offers credible.
Serviceability. Whether your income can support the repayments after expenses and other debts — the core of every lending decision.
Serviceability buffer. Lenders must assess you at your rate plus 3%. It's why your borrowing power is less than a repayment calculator implies — and why approved borrowers survive rate rises.
Genuine savings. Money you saved yourself (not gifts or windfalls), usually needing a 3-month history. Some lenders count rent payments instead.
Guarantor / family guarantee. A family member's property equity secures part of your loan — often eliminating the deposit and LMI entirely. Their risk is real; legal advice is standard.
Conditional vs unconditional approval. Conditional = yes, subject to items (valuation, documents). Unconditional = the real yes; contracts can proceed safely.
Low-doc. Proving income with BAS or bank statements instead of full financials — built for self-employed borrowers.
The loan itself
Fixed rate. Locked for 1–5 years. Certainty; limited extra repayments; break costs if you exit early.
Variable rate. Moves with the market (and the RBA cash rate). Flexibility, offsets, unlimited extra repayments.
Split loan. Part fixed, part variable. Both kinds of benefit, proportionally.
Interest-only. Repay just interest for a set period (usually up to 5 years). Lower repayments, no debt reduction — mostly an investor tool.
Principal & interest (P&I). The standard repayment type: each payment covers interest plus a slice of the debt itself.
Redraw. Access to extra repayments you've made into the loan. Like an offset with more rules.
Loan term. The scheduled life of the loan, usually 25–30 years. Longer = lower repayments, more total interest.
Package loan. Loan + offset + credit card bundled for an annual fee, usually with a rate discount. Worth it at larger balances.
Buying & settlement
Stamp duty (transfer duty). WA's tax on property purchases. First home buyers pay nothing up to $600,000 and a discount to $800,000 since 7 May 2026 (WA Government). Estimate yours with the WA stamp duty calculator.
Settlement. The legal handover day: money moves, title transfers, you get keys. Usually about four weeks after signing.
Conveyancing / settlement agent. The professional who handles the legal transfer. In WA, typically $800–$1,500.
Subject to finance. The contract clause that lets you exit with your deposit if your loan isn't approved. First home buyers should never offer without it.
Valuation. The lender's independent assessment of the property's worth — which can differ from the price you agreed.
Equity. Property value minus loan balance. Accessible equity is what lenders let you borrow against — usually up to 80% of value.
Money & rates
RBA cash rate. The Reserve Bank's base rate that variable mortgage rates track — 4.35% as at July 2026.
Basis point. One-hundredth of a percent. A "25 basis point cut" = 0.25%.
Principal. The amount you actually borrowed — what interest is charged on.
Amortisation. The gradual payoff of the loan over its term. Early payments are mostly interest; the mix flips over time.
Refinancing. Replacing your loan with a better one — see when it's worth it.
Loyalty tax. The unofficial premium lenders charge long-standing customers versus new ones — typically 0.3–0.8%.
Best Interests Duty. The legal obligation on mortgage brokers (not banks) to act in your best interests. It's the structural reason broker recommendations differ from bank sales.
Still hit a term we haven't covered? Ask a TAG broker — free, and we'll add it here.