Basic Home Loan Glossary Explained — Are you considering purchasing your first home or investment property?
As Australia’s leading home financing experts, Investors Mortgage wants to ensure every borrower understands the basics.
Here’s a glossary covering some common mortgage lingo:

Variable Rate Mortgage

• What is it?

A Variable Rate Mortgage is a type of loan where interest rates fluctuate based on market conditions. It may go up or down over your loan term. This provides flexibility in your repayments but can lead to changes in your monthly payment amounts.

• Why consider it?

For those who value flexibility and are comfortable with potential changes in monthly repayments.

Fixed Rate Mortgage

• What is it?

An interest rate locked in for a defined period, often 1-5 years. It protects against variable rate hikes during that time frame. This offers stability and predictability in monthly payments.

• Why consider it?

Ideal for those who prefer a consistent monthly budget and want protection from interest rate fluctuations within the set period.

Split Mortgage

• What is it?

A Split Rate Mortgage combines both variable and fixed-rate components. This option strikes a balance between flexibility and stability.

• Why consider it?

Perfect for those who want the best of both worlds - the security of a fixed rate and the flexibility of a variable rate.

Interest-Only Mortgage

• What is it?

An Interest-Only Mortgage allows you to pay only the interest for a set period, typically 1-2 years. Principal repayment begins after the interest-only period.

• Why consider it?

Suited for those who want lower initial monthly payments or are planning for future income increases. It’s also a popular option if you are interested in a construction loan.

Offset Account

• What is it?

An Offset Account links your mortgage account with a transaction account. The money you put into the offset account reduces the interest payable on the mortgage.

• Why consider it?

Efficient for reducing interest costs while maintaining easy access to your funds.

Construction Loan

• What is it?

Designed for those building a new home, a Construction Loan releases funds in stages as construction progresses.

• Why consider it?

Ideal for those undertaking new construction projects, providing financial support at each stage of the building process, so you only start paying in full once the construction is completed.

Low Deposit Loan

• What is it?

A Low Deposit Loan allows you to purchase a property with a lower than standard deposit (less than 20%), though it may require lender's mortgage insurance (LMI) for higher loan-to-value ratios.

• Why consider it?

Perfect for those with limited upfront savings, making homeownership more accessible. The LMI amount can be capitalised towards your total loan amount.

Understanding mortgage terminology is key to getting the best home loan for your situation. Let Investors Mortgage expertise provide clarity and guide you each step of the way. Contact us to start a conversation about your financing options.