Home loan glossary

Home loan glossary

Unpack and digest some common home loan terms.

Application fee

What you pay to cover the cost of setting up the loan.

Deposit

How much money you have saved towards buying your home or property.

LMI

Lenders Mortgage Insurance (LMI) may be a way – if you have a large enough deposit – to allow you to borrow a higher portion of the purchase price of your property. Or, you can provide a larger deposit if you do not want to take up LMI.

Loan calculator

Calculators are a good starting point if you are not sure where to start. You can work out stuff like how much you can borrow and how much your repayments will be.

Positive and negative gearing

One of the advantages of investment property is that losses can be tax deductible. To do so however, means making a loss which can then be used to reduce your tax at tax time. This is called negative gearing.

On the other hand, if you make a profit on the investment, you’ll not be able to claim a tax deduction. You will, however, not make a loss on the way through. This is called positive gearing.

Monthly fees

Something we like to keep to zero. That is $0 monthly fees, you heard it here first, unless you heard it somewhere else, in which case, you heard it here second...

LVR

Your Loan to Value Ratio (LVR) is the proportion of money you intend to borrow compared to the value of the property. It will also help work out whether or not you will need Lenders Mortgage Insurance.

Offset

A mortgage Offset facility is an eligible transaction account linked to an eligible home loan account. Instead of being charged interest on the full loan balance, interest is charged on the loan balance minus the balance in the Offset account. Learn more.