Buying your first property can be an exciting time, but trying to wrap your head around the terminology, jargon and exactly what you need to do can be stressful and confusing.

Our loan specialists are here to simplify it for you, and explain the fundamentals of home loans.

What is the difference between a home loan and mortgage?

 Home loans are a type of loan that is used to purchase real estate. The bank will lend an individual money to buy the real estate, and the individual will then need to pay it back to the bank over time.

A mortgage is the agreement between you (the borrower) and the bank (the lender).

How long will it take to repay my loan?

Home loan terms generally range from 25 to 30 years, but this depends on your financial situation and the price of the property you buy.

You can use our Repayment Calculator to get an estimate of what your repayments might be.

Deposits and Lenders Mortgage Insurance (LMI)

 To secure a home, you will need to make a deposit. This is your initial contribution to the price of a property.

Australian's will generally need 20% of the property's full price as a deposit. It is possible to get a home loan without a 20% deposit, but you will need to pay what is called Lenders Mortgage Insurance (LMI).

LMI is a type of insurance that the lender (the bank) takes out to protect itself against the risk of you not being able to meet your loan repayments. You do not have to pay LMI up front, and this will be included in the overall amount of money you need to pay back to the bank.

The cost of LMI will depend on the price of the property.

There is a way you can avoid paying LMI if you don't have a 20% deposit, and that's by getting a guarantor. This is often a family member who is willing to be responsible for paying back the loan if you can't. This is a way for the bank to safeguard themselves when lending you money.

In addition, some government schemes offer lower minimum deposits, so keep an eye out in the new financial year.

Fixed rate vs variable rate mortgages

 When you borrow money from a bank, you are required to pay interest. Interest is a fee you are charged for borrowing money. Interest rates fluctuate over time, depending on the global economy.

There are two ways you can pay interest on your home loan:

Fixed rate interest: When you organise your loan, you can lock in an interest rate for a period of time, typically between 1-5 years. This means that even when the global interest rates change, your rate will stay the same.

Variable rate interest:  These rates give you more flexibility than fixed rates. With a variable rate, the rate of interest you pay will change with the economy. So for example, if the global rates go down, so will your rate. Similarly, if the rates rise, so will your rate.

How do I know which is right for me? Chat to a home loan specialist about your options and unique situation, and they can help you make a decision.

What is an offset account?

An offset account is an everyday bank account that is linked to your home loan. You can deposit any extra savings into that account, which then offsets the amount you owe on your home loan.

For example, say you have a home loan of $500,000. You have $20,000 in your offset account, so now you will only be charged interest on a loan balance of $480,000.

The great thing about offset accounts is that you can access it whenever you need it, so your money isn't locked in.

How do I get a home loan?

 To get a home loan, you can either go straight to a bank or to a broker (like us).

The benefits of going to a broker is that we can shop around for you - in short, we're the middleman between you and the bank, and can do the legwork so you don't have to. We have relationships with a variety of different banks to find you the best deal depending on your goals and situation.

What a lot of people don't know is that brokers don't actually charge services fees, so you can come and see us free of charge. The banks pay us when we link you up with them to borrow money - like a commission.

If you're keen to get started, you can contact us or fill out our online survey and one of our home loan specialists will be in touch. 

When you come in for a consultation, we'll guide you step by step so you can be on your way to owning your first property.

*This information is subject to change.