Understanding mortgage terminology is one of the most important steps before buying a home or refinancing a property. Many borrowers sign mortgage documents without fully understanding the language used by lenders, which can lead to confusion, costly mistakes, and long-term financial stress. That is exactly why learning 84 mortgage terms you should know is essential for every homebuyer.
This comprehensive guide explains 84 mortgage terms you should know, broken down into easy-to-understand sections. Whether you are a first-time buyer or an experienced homeowner, this article will help you speak the language of mortgages with confidence.
Why Learning Mortgage Terminology Matters
Mortgages involve legal, financial, and technical language. If you do not understand the terms, you may:
- Choose the wrong loan
- Pay higher interest
- Miss better mortgage deals
- Struggle with repayments
Knowing these 84 mortgage terms you should know empowers you to compare loans, negotiate better terms, and make smarter decisions.
Basic Mortgage Terms You Should Know (1–15)
- Mortgage – A loan used to purchase or refinance property.
- Principal – The amount you borrow from the lender.
- Interest – The cost of borrowing money from the lender.
- Loan Term – The length of time to repay the mortgage.
- Monthly Repayment – The amount paid each month.
- Down Payment – The upfront payment made toward the property.
- Deposit – Another term for down payment.
- Loan-to-Value Ratio (LVR) – The loan amount compared to property value.
- Borrowing Power – How much a lender is willing to lend.
- Pre-Approval – Conditional approval for a mortgage.
- Settlement – Final transfer of property ownership.
- Conveyancing – Legal process of property transfer.
- Title – Legal ownership of property.
- Equity – The portion of property you own outright.
- Mortgage Agreement – Legal contract between borrower and lender.
These basic concepts form the foundation of the 84 mortgage terms you should know.
Interest Rate & Loan Type Terms (16–30)
- Fixed Interest Rate – Interest rate remains unchanged for a set period.
- Variable Interest Rate – Interest rate can change over time.
- Split Loan – Combination of fixed and variable rates.
- Introductory Rate – Discounted rate offered initially.
- Comparison Rate – Interest rate plus fees combined.
- Annual Percentage Rate (APR) – Total yearly borrowing cost.
- Interest-Only Loan – Payments cover interest only for a period.
- Principal & Interest Loan – Payments reduce loan balance and interest.
- Offset Account – Savings account linked to mortgage balance.
- Redraw Facility – Ability to withdraw extra repayments.
- Balloon Payment – Large payment due at loan end.
- Rate Lock – Secures interest rate before settlement.
- Discount Rate – Reduced rate from standard variable rate.
- Reversion Rate – Rate applied after fixed term ends.
- Cap Rate – Maximum interest rate limit.
Interest-related definitions are among the most important 84 mortgage terms you should know.
Fees & Costs Mortgage Terms (31–45)
- Application Fee – Fee to apply for a mortgage.
- Valuation Fee – Cost to assess property value.
- Settlement Fee – Charged at loan completion.
- Legal Fees – Costs for legal services.
- Lender’s Mortgage Insurance (LMI) – Insurance for low deposits.
- Break Fee – Fee for exiting fixed-rate loan early.
- Exit Fee – Fee charged when closing a mortgage.
- Ongoing Fees – Monthly or annual account fees.
- Stamp Duty – Government tax on property purchases.
- Rate Adjustment Fee – Fee for interest rate changes.
- Late Payment Fee – Charged for missed repayments.
- Discharge Fee – Fee to release mortgage title.
- Refinancing Costs – Fees involved in switching lenders.
- Upfront Costs – All initial purchase-related expenses.
- Hidden Fees – Costs not clearly disclosed.
Understanding fees is a vital part of learning the 84 mortgage terms you should know.
Approval & Credit Terms (46–60)
- Credit Score – Measure of creditworthiness.
- Credit Report – Record of borrowing history.
- Debt-to-Income Ratio (DTI) – Debt compared to income.
- Serviceability – Ability to repay loan.
- Conditional Approval – Approval subject to conditions.
- Unconditional Approval – Final loan approval.
- Guarantor – Person guaranteeing part of loan.
- Co-Borrower – Another borrower on the mortgage.
- Verification of Income – Proof of earnings.
- Living Expenses Assessment – Review of household spending.
- Credit Inquiry – Lender check on credit file.
- Risk Assessment – Lender’s loan risk evaluation.
- Default – Failure to meet loan obligations.
- Foreclosure – Lender repossession of property.
- Hardship Application – Request for repayment relief.
Approval-related definitions are critical mortgage terms you should know before applying.
Refinancing & Advanced Mortgage Terms (61–75)
- Refinancing – Switching to a new mortgage.
- Cash-Out Refinance – Accessing equity as cash.
- Top-Up Loan – Increasing existing mortgage amount.
- Loan Portability – Transferring loan to new property.
- Mortgage Broker – Professional who compares lenders.
- Direct Lender – Bank or institution lending directly.
- Non-Bank Lender – Alternative lending institution.
- Bridging Loan – Short-term loan between properties.
- Construction Loan – Mortgage for building a home.
- Progress Payments – Payments made in construction stages.
- Investment Mortgage – Loan for rental property.
- Owner-Occupied Loan – Mortgage for personal residence.
- Negative Gearing – Investment loss for tax benefits.
- Positive Gearing – Investment profit.
- Mortgage Review – Regular loan assessment.
These advanced items complete a major portion of the 84 mortgage terms you should know.
Final Legal & Protection Terms (76–84)
- Mortgage Insurance – Protection for lender or borrower.
- Home Insurance – Covers property damage.
- Title Insurance – Protects ownership rights.
- Cooling-Off Period – Time to cancel contract.
- Encumbrance – Claim against property title.
- Power of Sale – Lender’s right to sell property.
- Mortgage Discharge – Removal of lender’s claim.
- Loan Documentation – All mortgage paperwork.
- Amortization Schedule – Repayment breakdown over time.
These final concepts complete the full list of 84 mortgage terms you should know.
Conclusion
Learning 84 mortgage terms you should know gives you confidence, control, and clarity throughout the home-buying or refinancing process. Mortgages should never feel confusing or intimidating. When you understand the language, you make better decisions, avoid costly mistakes, and secure a loan that truly fits your lifestyle.
Whether you are applying for your first home loan or reviewing your current mortgage, this guide to 84 mortgage terms you should know is a valuable reference you can return to anytime.
