Australian Property & Finance Glossary
A quick-reference guide to fundamental terms, abbreviations, and regulatory concepts across Australian property investment, lending, and taxation.
Quick Jump:
LVR •
LMI •
Serviceability •
APRA Buffer •
Negative Gearing •
CGT •
Gross vs Net Yield •
Usable Equity
LVR •
LMI •
Serviceability •
APRA Buffer •
Negative Gearing •
CGT •
Gross vs Net Yield •
Usable Equity
Loan-to-Value Ratio (LVR)
The size of your mortgage borrowing expressed as a percentage of the lender’s appraised value of the property security. An $800,000 loan against a $1,000,000 property equals an 80% LVR.
Lenders Mortgage Insurance (LMI)
An insurance premium charged to the borrower when borrowing more than 80% LVR. LMI protects the lending institution (not the borrower) against financial loss if the borrower defaults.
Serviceability
The lender’s underwriting test to assess whether a borrower’s net income, after subtracting existing debts, living expenses, and interest rate stress buffers, can service the loan.
APRA 3% Serviceability Buffer
A regulatory mandate by the Australian Prudential Regulation Authority requiring banks to stress-test loan repayments at a minimum of 3.00% above the contract interest rate.
Negative Gearing
A tax situation where the total allowable deductible expenses of holding a rental property (interest, council rates, repairs, depreciation) exceed the gross rental income generated.
Capital Gains Tax (CGT)
The tax paid on the net profit realised when selling an investment asset. In Australia, assets held for more than 12 months by individuals or trusts receive a 50% CGT discount.
Gross vs Net Rental Yield
Gross rental yield is annual rental income divided by purchase price. Net rental yield subtracts all holding expenses (rates, water, strata, insurance, maintenance) before calculating return.
Usable Equity
The portion of property wealth accessible without exceeding an 80% LVR on the security property (calculated as 80% of current valuation minus existing mortgage debt balance).