AAPR: The annual average percentage rate, also known as AAPR, is the standard used to determine the actual cost of a loan, including the costs incurred with the loan.

ABA: Acronym for the Australian Bankers' Association.

Amortisation: Each time you make a payment on your loan, a portion of your payment goes towards interest and a portion towards the principal of your loan. The length of time it will take to pay of the entire principal balance of a loan is the amortisation.

Application fee: The up-front fee charged when you apply for a loan.

Balance sheet: A worksheet outlining your assets and liabilities.

Breach of contract: Defaulting on a contract by breaking the conditions of said contract.

Break costs: Usually applied to fixed loans, the break costs are the costs incurred when a loan is paid off early.

Bridging finance: When you need to purchase a new home before selling your old home, bridging finance allows you to finance the purchase.

Capped loan: A loan where the interest rate can never exceed a certain point.

Combination loan: Also known as split loans, combination loans occur when various loans are put together to form one loan.

Construction loan: A loan given for construction of a new property.

Consumer credit code: Parliamentary legislation which governs the relationship between borrowers and lenders.

Creditor: A person, entity or business to whom money is owed.

Default: Failure to pay a loan payment by a specific due date.

Deferred establishment fee: The penalty imposed by a lender when the borrower pays off the loan.

Deposit bonds: A bond guaranteeing that a buyer of a property will pay the deposit in full by the due date.

Disbursements: The fees and charges, including any government fees, associated with establishing a loan.

Discharge fee: When a loan is paid off, a discharge fee may be charged by the lender.

First home owner's grant: A $7,000 grant for first-time home buyers for the use of purchasing or building a home.

Fixed rate: A loan that has an interest rate that does not fluctuate.

Guarantor: A person who agrees to be responsible for the payment of another person's debts. Also known as a co-signer.

Installment: The installment is the regular payment that is made to your lender on a periodic basis.

Interest rate: The interest rate is the rate at which interest is applied to your loan. It is how the lender charges for lending you money.

Joint tenants: When two people own a property equally, they are considered to be joint tenants.

Lump sum repayments: Lump sum repayments are payments made to the loan. These payments are made at various amounts at various periods of time.

LVR: LVR stands for loan-to-value ratio. The loan-to-value ratio is a percentage rate reflecting the amount of equity in a property versus what you owe on that property.

Maturity: The date when the loan becomes due in full.

Mortgage: The mortgage is the transfer of rights to the property to a lender in return for borrowing funds. The rights are transferred back to the owner when the loan is paid in full.

Mortgage broker: An individual or company that works with a group of lenders and can arrange financing for you.

Mortgage insurance: The lender may take out mortgage insurance on your loan to protect themselves in the case that you were to default on your loan. Usually, mortgage insurance is taken out on properties with a loan-to-value ratio of 80 percent or more.

Mortgagee: The lender of the funds of a mortgage.

Mortgagor: The person borrowing the money to purchase or refinance a home.

Principal: The amount of money that was borrowed, on which interest is paid.

Refinance: To pay off your existing loan with the proceeds of a new loan. The new loan can be through either a different lender or the same lender the original loan was with.

Security: An asset that the lender uses to guarantee that the loan will be repaid.

Settlement: The date that the mortgage funds are released and the property changes ownership.

Standard variable rate: An interest rate applied to a loan that may have features such as split-loan options or mortgage offset.

Term: The length of the loan.

Unsecured: When a lender lends money without taking property as security.

Valuation: A report detailing a professional's opinion as to what a property is worth. All lenders will require a valuation before lending funds to purchase a property.

Valuer: A professional who examines a property in order to determine its worth.

Variable rate: When the reserve bank fluctuates, a variable rate will go up or down in accordance with the movement.