What is LVR (Loan to Value Ratio)?

The amount of the loan expressed as a percentage of the property value. For example, if a property is worth $500k and you owe $400k, your LVR is 80%. Broker insight: Lenders usually charge a premium (LMI) if your LVR is higher than 80%.

What is LMI (Lenders Mortgage Insurance)?

A one-off insurance premium that protects the lender (not you) if you default on the loan. It's typically required when you have less than a 20% deposit. Broker insight: You can often 'capitalize' this, meaning you add the cost to your total loan amount instead of paying it upfront.

What is Offset Account?

A transaction account linked to your home loan. The balance in this account 'offsets' the loan balance, so you only pay interest on the difference. Broker insight: It's the ultimate tool for paying off a mortgage faster while keeping your cash 100% accessible.

What is Redraw Facility?

A feature that allows you to withdraw any extra repayments you've made into your loan account over and above the minimum requirements. Broker insight: Unlike an offset, redraw funds are physically inside the loan and may have different tax implications for investors.

What is P&I (Principal and Interest)?

A repayment type where you pay back both the original amount borrowed (Principal) and the interest charged by the bank. Broker insight: This is the most common way to eventually own your home outright.

A state government tax on property transactions. The amount varies by state and is calculated based on the property's purchase price. Broker insight: First home buyers often qualify for exemptions or concessions on this cost.

What is Conveyancing?

The legal process of transferring property ownership from a seller to a buyer, usually handled by a solicitor or licensed conveyancer. Broker insight: They handle 'searches' to make sure the property doesn't have hidden issues like unpaid rates or illegal structures.

The final stage of the property sale where the buyer's lender provides the funds to the seller, and the title is legally transferred. Broker insight: This is the day you officially get the keys to your new home!

The difference between the market value of your property and the amount you still owe on your mortgage. Broker insight: You can use 'usable equity' as a deposit for an investment property without using your own cash.

What is Negative Gearing?

When the costs of owning an investment property (interest, rates, etc.) are higher than the rental income it generates. Broker insight: The resulting 'loss' can often be used to reduce your taxable income from your salary.

What is Sunset Clause?

A condition in an off-the-plan contract that allows the buyer or seller to terminate the contract if the project isn't completed by a specific date. Broker insight: Be careful—developers sometimes use this to cancel contracts in a rising market to resell at a higher price.

What is CCR (Comprehensive Credit Reporting)?

A system where your credit report shows both your negative events (missed payments) and your positive behaviors (on-time payments). Broker insight: 24 months of on-time payments can build a very strong case for loan approval.

What is Bridging Finance?

A short-term loan that allows you to buy a new property before you have sold your existing one. Broker insight: The 'Peak Debt' covers both properties until the sale of your old home is finalized.

What is Genuine Savings?

Funds that have been accumulated in a bank account for at least 3 months. It proves to the lender that you have the discipline to save. Broker insight: Gifts from parents usually aren't counted as 'genuine' until they've sat in your account for 90 days.

An assessment of a property's value by an independent professional, ordered by the bank to ensure the security is worth the loan amount. Broker insight: A 'desktop' valuation is done by computer, whereas a 'full' valuation requires an inspector to walk through the home.

Why should I use a mortgage broker instead of going directly to a bank?

A mortgage broker compares hundreds of loan products across 40+ lenders on your behalf, often securing better rates and terms than you would find on your own. The service is typically free for borrowers — lenders pay the broker a commission. A broker also handles the paperwork, negotiates on your behalf, and provides ongoing support after settlement.

How much deposit do I need to buy a home in Australia?

Most lenders require a minimum 5% deposit, though a 20% deposit is ideal as it avoids Lenders Mortgage Insurance (LMI). First home buyers may qualify for government schemes like the First Home Guarantee, which allows purchases with as little as 5% deposit without LMI. Your broker can assess your situation and recommend the best strategy.

What is the difference between a fixed and variable home loan rate?

A fixed rate locks your interest rate for a set period (typically 1–5 years), giving you certainty on repayments. A variable rate can change at any time based on market conditions and lender decisions. Many borrowers split their loan between fixed and variable portions to balance certainty with flexibility. Your broker can model different scenarios to find the right mix.

How much can I borrow for a home loan?

Your borrowing capacity depends on your income, living expenses, existing debts, credit history, and the lender's assessment criteria. As a rough guide, most lenders allow borrowing up to 6 times your gross annual income, but this varies significantly. Use our Borrowing Power Calculator for an estimate, or speak to our team for an accurate pre-approval assessment.

Does The Finance Office charge a fee for its mortgage broking services?

No. Our mortgage broking service is free for borrowers. We are paid a commission by the lender once your loan settles. This means you get expert advice, access to 40+ lenders, and full application support at no cost to you.

How long does the home loan approval process take?

A straightforward home loan application typically takes 2–5 business days for conditional approval and 1–2 weeks for formal (unconditional) approval. Complex applications involving self-employed income, multiple properties, or non-standard structures may take longer. Your broker manages the entire process and keeps you updated at every stage.

Finance Insights & Guides

The Finance Office Blog

Expert insights on Australian mortgage broking, property investment, lending strategies, and financial planning.

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