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Learning centre

Plain-English home loan glossary.

Learn the mortgage terms, government pathways and lending topics Australian borrowers commonly search before buying, refinancing or reviewing a loan.

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Home Loan
Learning Centre

Glossary

Home loan topics people should know

Search by term or filter by category. Each card is written as general education and links to official or primary sources where rules may change.

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Loan basics

Fixed, variable and split loans

Fixed loans trade flexibility for repayment certainty over a set period. Variable loans can move with lender and market changes. Split loans divide the balance between both.

  • Ask about break costs, extra repayment limits and offset access.
  • Compare the rate and the features you will actually use.

Source: ASIC Moneysmart

Loan basics

Basic variable loan

A simpler variable loan may have fewer packaged features. It can suit borrowers who want a clean loan structure, but the rate, fees and redraw rules still matter.

  • Check whether offset, redraw or package discounts are included.
  • Make sure the saving is real after annual and upfront fees.

Source: ASIC Moneysmart

Loan basics

Principal and interest repayments

Principal and interest repayments gradually reduce the loan balance while also paying interest. Loan term and rate changes both affect the repayment size.

  • Shorter terms usually cost less interest but need higher repayments.
  • Use a repayment buffer before committing.

Source: ASIC Moneysmart

Loan basicsAdvanced

Interest-only loans

Interest-only repayments do not reduce the loan balance during the interest-only period. Repayments can jump when the loan reverts to principal and interest.

  • Commonly discussed by investors, but serviceability and exit plan matter.
  • Check the total interest cost over the full loan term.

Source: ASIC Moneysmart

Loan basics

Offset accounts and redraw

An offset account can reduce the balance used to calculate interest. Redraw lets you access eligible extra repayments, subject to lender rules.

  • Offset can be useful for savings and cashflow.
  • Redraw access, limits and timing differ by lender.

Source: ASIC Moneysmart

BuyingSchemes

Lenders Mortgage Insurance

LMI protects the lender, not the borrower, when lending risk is higher. Borrowers usually pay the cost if their deposit is below the lender's threshold.

  • LMI can help buyers enter sooner with a smaller deposit.
  • It may be paid upfront or added to the loan, depending on lender policy.

Source: Insurance Council of Australia

Schemes

Australian Government 5% Deposit Scheme

The scheme can help eligible buyers purchase with a smaller deposit and no LMI through participating lenders. Single parents or legal guardians may have a 2% pathway.

  • Eligibility, property caps and obligations need to be checked before relying on it.
  • You apply through a participating lender, not directly to Housing Australia.

Source: firsthomebuyers.gov.au

Schemes

Help to Buy Scheme

Help to Buy is a shared equity scheme where the Australian Government contributes part of the purchase price for eligible buyers through participating lenders.

  • The government share must be repaid later or when the property is sold.
  • Property price caps and ongoing obligations apply.

Source: firsthomebuyers.gov.au

Schemes

First Home Owner Grant

FHOG is state and territory administered. Amounts, home type rules and eligibility can change depending on where the buyer purchases.

  • Check the official state or territory revenue office before applying.
  • Some grants only apply to new homes or capped property values.

Source: firsthome.gov.au

Buying

Pre-approval

Pre-approval is a lender's conditional view of how much you may be able to borrow. It is not final approval, but it can make property hunting more practical.

  • Conditions can include valuation, income checks and property type.
  • Keep spending stable while pre-approval is active.

Source: ASIC Moneysmart

Buying

Borrowing power

Borrowing power is shaped by income, expenses, debts, dependants, deposit, credit history and lender policy. Different lenders can assess the same borrower differently.

  • Reduce unused debts and know your living expenses before applying.
  • Borrowing capacity is not the same as comfortable affordability.

Source: ASIC Moneysmart

Buying

Stamp duty and transfer duty

Transfer duty is a state or territory cost that can materially change the cash needed to buy. First home buyer concessions may reduce the cost if eligible.

  • Rules vary by state, buyer type and property value.
  • Budget for duty early, not after contract signing.

Source: firsthome.gov.au

BuyingAdvanced

Bridging loans

Bridging finance can help when buying a new property before the current one settles. It can solve timing pressure, but it also concentrates risk and repayments.

  • Ask how long the bridge can run and what happens if the sale is delayed.
  • Know the peak debt, interest cost and required exit strategy.

Source: General lender education and broker assessment

Loan basics

Refinancing

Refinancing means replacing your current loan with a new loan, often for rate, structure, cashflow or feature reasons.

  • Check discharge fees, package fees, cashback conditions and break-even timing.
  • Do not compare rate alone; compare full loan fit.

Source: ASIC Moneysmart

BuyingAdvanced

Construction loans

Construction loans usually release funds in stages as the build progresses. The lender will review the building contract, valuation and drawdown schedule.

  • Budget for variations, delays and interest during construction.
  • Land and build contracts may be assessed differently from established homes.

Source: General lender education and broker assessment

Loan basicsAdvanced

Refinancing after construction is completed

Once a build is finished, borrowers often review whether to keep the loan with the current lender, convert it to a standard home loan, or refinance for a better rate, offset account or loan structure.

  • Lenders may ask for a final valuation, occupancy certificate, final progress payment confirmation and updated income documents.
  • Check timing, discharge costs, construction loan conditions and whether the finished property value changes your LVR.

Source: General lender education and broker assessment

BuyingAdvanced

Guarantor loans

A family guarantee may help reduce deposit or LMI pressure by using a guarantor's security. The guarantor takes real financial risk if repayments fail.

  • Independent legal and financial advice is usually important.
  • Plan when and how the guarantee could be released.

Source: ASIC Moneysmart

Advanced

SMSF property loans

Buying property through an SMSF has strict superannuation rules and can involve significant setup, advice, lending and ongoing costs.

  • The property must support retirement purposes and cannot be used like a personal home.
  • Get licensed financial, tax and legal advice before proceeding.

Source: ASIC Moneysmart and ATO

Profession loans

Medico home loans

Some lenders have special policy settings for doctors, dentists, vets or other medical professionals. These may include higher LVR options or LMI waivers.

  • Eligibility depends on role, registration, income type and lender policy.
  • Policy can change, so current lender comparison is essential.

Source: Lender policy checks and broker assessment

Profession loans

Nurse and healthcare worker loans

Some lenders and schemes may help nurses and healthcare workers access low-deposit pathways, but there is no single universal nurse loan across every lender.

  • Check 5% Deposit Scheme eligibility as well as lender policy.
  • Casual, overtime and allowance income may be treated differently by lenders.

Source: 5% Deposit Scheme and lender policy checks

Profession loans

Emergency services and government worker loans

Some lenders consider stable public-sector or emergency-services employment favourably, but the benefit depends on lender policy and the full application.

  • Ask how allowances, overtime, shift loadings and probation are assessed.
  • Compare profession policy with standard low-deposit and scheme options.

Source: Lender policy checks and broker assessment

Buying

Using a mortgage broker

A broker helps compare lenders, policy and loan structures, then supports the application process. Brokers also help explain trade-offs in plain English.

  • Ask which lenders are on the panel and how the broker is paid.
  • Broker market share remains high in Australian residential lending.

Source: ASIC Moneysmart and MFAA

Loan basics

Credit score and credit report

Your credit report can influence lender confidence. Defaults, missed payments, multiple recent enquiries and high credit limits may affect options.

  • Check your report before applying if you are unsure.
  • Fix errors early; they can slow approval.

Source: ASIC Moneysmart

Advanced

Self-employed home loans

Self-employed borrowers may need business financials, tax returns, BAS or accountant information. Different lenders handle company, trust and sole-trader income differently.

  • Prepare current and prior-year income documents.
  • Explain one-off expenses, add-backs and income changes clearly.

Source: Lender policy checks and broker assessment

Loan basics

Comparison rate

The comparison rate combines the interest rate with certain fees to help borrowers compare the cost of loans. It does not capture every feature or scenario.

  • Use it as a guide, not the whole decision.
  • Package benefits and offset value may not be obvious from the number alone.

Source: ASIC Moneysmart

Loan basics

Loan-to-value ratio

LVR compares the loan amount with the property value. Higher LVRs usually mean higher lender risk and may affect rate, LMI, policy and approval conditions.

  • A 95% LVR usually means a 5% deposit before costs.
  • Government guarantee schemes may change how LMI applies.

Source: 5% Deposit Scheme

Important

General information only

This page is educational and does not take into account your objectives, financial situation or needs. Eligibility for loans, grants and government schemes can change and may depend on your lender, property type, location and personal circumstances. Check official sources and speak with a qualified professional before acting.

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