Finance terms, translated into human.
Home loans come with a remarkable amount of jargon for something that should be understandable. So this is our plain-English guide to the words, ratios and abbreviations you are likely to hear when buying, refinancing or reviewing a home loan.
Why we built this
You should not need a finance degree to understand your home loan
Mortgage conversations can quickly fill up with terms like LVR, DTI, offset, redraw, serviceability, comparison rates and half a dozen other things that sound more complicated than they really are.
This glossary is not here to give you a one-line dictionary definition and send you on your way. We explain what the term actually means, show you how it can work in the real world, point out where the catches can be and explain why it might matter to your loan.
Our rule: if it sounds like it came out of a banking manual, we have probably not explained it properly yet.
Start here
What are you trying to understand?
We are building this properly, one useful explanation at a time. Start with the first three terms below.
More terms will be added here as the glossary grows.
Offset account
An everyday-style account linked to your home loan that can reduce the loan balance used to calculate interest. Sounds simple — but whether it is actually worth having depends on how you use it and what the loan costs.
Offset accounts in plain EnglishLoan-to-value ratio (LVR)
LVR is basically the percentage of a property's value that you are borrowing. Lenders use it for all sorts of decisions, including how much equity you have and whether lenders mortgage insurance may come into the picture.
LVR in plain EnglishDebt-to-income ratio (DTI)
DTI compares your total debt with your income. It is one of the ways lenders look at how much debt sits behind an application — but it is not the same thing as borrowing capacity or serviceability.
DTI in plain EnglishHow we explain things
Less dictionary. More “okay, now I get it.”
What does it actually mean?
We start with the normal-human version before getting anywhere near technical wording.
Show me an example
Numbers and real-life scenarios usually explain finance better than another paragraph of jargon.
Why should I care?
We explain where the term can actually affect your home loan, options or decisions.
What is the catch?
If there is a limitation, trade-off or common misunderstanding, we would rather tell you.
A couple of useful things to know
About the Loan Location glossary
Is this glossary financial advice?
No. These pages are designed to help explain common home-loan and finance terms in general language. How a concept applies to you can depend on your circumstances, lender policy, loan structure and the products available at the time.
Why not just use a normal banking dictionary?
Because knowing the technical definition is often only half the job. We want to explain what something means in practice, why a lender cares about it and why you might care about it too.
Will you be adding more finance terms?
Yes. Offset accounts, LVR and DTI are the starting point. We will keep adding the terms that actually come up in home-loan conversations rather than filling the page with obscure words nobody is searching for.
What if I still do not understand something?
Ask us. Finance has a habit of becoming unnecessarily complicated once individual lenders, products and personal circumstances are involved. Sometimes a two-minute conversation beats another ten tabs of Google.
Still staring at a finance term thinking “what on earth does that mean?”
Send it our way. We are happy to explain the jargon, and if it deserves a place in this glossary, there is a good chance we will add it for the next person too.
Note: The information in this glossary is general information only and does not take into account your personal objectives, financial situation or needs. Lending criteria, policies, fees, rates, product features and terminology can vary between lenders and can change over time.