Australian Finance Glossary

After-tax cash flow is the annual property cash result after expenses and estimated tax impact.

Amortisation is the process of gradually paying off a loan through regular repayments covering both principal and interest.

A serviceability buffer is an additional margin added to interest rates for borrowing-capacity assessment.

Assessment rate is the stress-tested interest rate used by lenders for serviceability calculations.

Australia’s national statistics agency, publishing datasets such as CPI and labour market indicators.

A balloon payment is a lump sum due at the end of a loan term, often used in car finance.

Borrowing capacity is an estimate of how much a lender may allow you to borrow based on income, expenses, debts, and lending rules.

The total cost of borrowing money, including interest and fees.

Break costs are charges that may apply when ending a fixed-rate period early, especially during refinance.

Break-even rent is the rental level where income and costs balance under selected assumptions.

Capital growth is the change in property value over time, separate from rental cash flow.

Capital works deduction is generally the building/structural depreciation component, often modelled using long claim periods.

The interest rate the RBA sets for overnight lending between banks. It influences many mortgage and savings rates.

The official cash rate level set by the RBA at its policy meetings.

A comparison rate combines interest and certain standard fees to help compare loan products on a common basis.

Construction cost is the building and eligible structural works cost used for depreciation estimates, excluding land value.

CPI measures how prices change over time. Annual CPI inflation shows how much prices rose compared with a year ago.

The reference period the CPI figure relates to, commonly shown as a quarter or month.

In borrowing assessments, lenders commonly treat your available credit card limit as an ongoing commitment.

A credit score is a number that represents your creditworthiness and helps lenders assess lending risk.

Cumulative interest is the running total of interest paid over a loan from the start to a given point in time.

When LoanMetric retrieved the latest official figure from the source.

Debt consolidation combines multiple debts into a single loan to simplify repayments and potentially reduce interest costs.

DTI compares total debt to gross annual income. Lenders use it as a risk signal for borrowing capacity.

Dependants are people financially supported by your household, such as children or non-earning family members.

Depreciation is a non-cash deduction that can reduce taxable rental income, but it does not increase rent cash received.

Public stats that influence interest rates and borrowing conditions in Australia.

Home equity is the difference between your property value and the amount you still owe on your loan.

An estimated annual rate that reflects the repayment pattern and included fees of a non-standard finance offer.

An establishment fee is an upfront charge some lenders apply when a new loan is set up.

Extra repayments are additional payments made beyond required repayments to reduce interest costs and shorten the loan term.

Finance charges are interest costs applied to outstanding balances under the product terms.

A fixed interest rate stays the same for a set period, making repayments more predictable.

Gross income is income before tax and deductions and is commonly used in serviceability checks.

HELP/HECS repayments are income-based amounts applied through the tax system when income exceeds thresholds.

HEM is a benchmark expense concept used in lending assessments alongside your declared living costs.

Inflation is the general rise in prices over time, reducing purchasing power.

An interest rate is the percentage charged on a loan balance that determines how much interest you pay over time.

The promotional time window where interest charges are reduced or not applied under the offer terms.

Interest-only repayments cover interest only for a set period, with principal usually repaid later.

LMI is insurance that protects the lender (not the borrower) when higher-LVR loans are approved.

How easily repayments fit within a budget, often affected by interest rates and income.

A loan term is the total length of time you have to repay a loan, typically expressed in years.

LVR is the percentage of a property value you borrow. A higher LVR usually means higher lender risk.

Marginal tax rate is the tax rate applied to your next dollar of taxable income.

The Medicare levy is a tax charge that generally applies as a percentage of taxable income.

Monetary policy is how a central bank adjusts interest rates and other settings to manage inflation and economic stability.

A monthly fee is an ongoing account or servicing fee charged each month on some loans.

Negative gearing is when property expenses exceed rental income, creating a tax-deductible loss.

Net income is what remains after tax and deductions are taken from gross income.

An offset account is a transaction account linked to a home loan that reduces interest calculations on the loan balance.

PAYG withholding is tax deducted from salary and wages before take-home pay is received.

A payment handling fee is a charge applied each time a repayment is processed.

P&I repayments cover both interest and loan principal, gradually reducing your balance over the loan term.

Principal repayment is the loan balance reduction component of repayments and is generally not tax-deductible.

The next scheduled RBA policy meeting where the cash rate may be reviewed.

A redraw facility lets you access eligible extra repayments made on your loan, usually under lender rules.

Refinancing replaces an existing loan with a new loan, often to change rate, structure, or features.

Remaining balance is the amount still owing at a point in time, such as at the end of a promo period.

Rental yield compares annual rental return to property value, usually shown as a percentage.

Repayment frequency is how often loan repayments are made, such as monthly, fortnightly, or weekly.

Australia’s central bank responsible for monetary policy, including cash rate decisions.

Retail finance is point-of-sale credit offered through retailers to spread purchase costs over time.

Return on equity measures annual gain or loss relative to the equity you have invested.

Salary sacrifice is an arrangement to direct part of pre-tax salary to approved benefits such as super.

Serviceability is a lender assessment of whether you can afford loan repayments based on income and expenses.

Settlement is the stage where legal ownership transfers and loan funds are finalised.

Stamp duty is a state or territory property transfer tax usually payable on purchase.

A store card is a retail-linked credit product used for purchases with participating merchants.

Superannuation is long-term retirement savings in Australia, including employer and voluntary contributions.

The tax-free threshold is the amount of annual income you can earn before income tax generally starts.

Taxable income is income used to calculate tax after applying eligible deductions and tax rules.

Total cost is the overall amount paid across the loan, including principal, interest, and applicable fees.

Upfront costs are one-off amounts paid at or before settlement, such as duty and legal fees.

Usable equity is the portion of your equity that may be available up to a chosen LVR threshold after existing secured debts.

Vacancy is the time a rental property is not tenanted, reducing collected rent and cash flow.

A variable interest rate can change with lender pricing or market conditions, which may increase or decrease repayments.