The Plain-English Finance Glossary: 20 Australian Lending Terms Explained

LVR (Loan-to-Value Ratio) — the loan amount as a percentage of the asset's value. An 80% LVR on a $600,000 property means a $480,000 loan.

LMI (Lenders Mortgage Insurance) — a one-off cost charged when your deposit is below 20%, protecting the lender (not you) if you default.

Comparison Rate — a rate that includes most fees and charges, giving a more accurate picture of the loan's true cost than the advertised rate alone.

Offset Account — a transaction account linked to your loan; the balance reduces the interest charged without reducing your loan balance.

Chattel Mortgage — a business loan structure where you own the asset from settlement, commonly used for vehicles and equipment.

Balloon Payment — a lump sum due at the end of a loan term, used to lower regular repayments throughout the loan.

Serviceability — a lender's assessment of your ability to repay a loan based on income, expenses, and existing debts.

Pre-Approval — an indicative approval of your borrowing capacity, subject to final conditions, useful before house or asset hunting.

Credit Licence (ACL/AFSL) — the licence ASIC requires for anyone providing credit assistance or financial advice in Australia.

Unsecured Loan — a loan not tied to a specific asset, generally carrying a higher interest rate to offset the lender's added risk.

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