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Home Loan Terminology Made Easy: A Mini-Glossary of 5 Must-Know Terms

Healthcare Home Loans


We know home loan jargon can be confusing—it’s like learning a new language while trying to make one of the biggest decisions of your life. 


That’s why we’ve created this simple guide to break down five essential home loan terms! 


With these key concepts, you’ll feel more confident and prepared to take the next step in your homeownership journey.


 

  1. Loan-to-Value Ratio (LVR)


  • What it Means: LVR is the percentage of the property’s value you’re borrowing from the lender.

  • Why It Matters: A lower LVR (e.g., 80% or less) often means better interest rates and lower fees.

  • Quick Example: If you’re buying a $500,000 home with a $100,000 deposit, your loan is $400,000, and your LVR is 80%.

  • Healthcare Lending Advantage: Doctors can borrow with as little as 5% deposit without paying Lenders Mortgage Insurance (LMI), while Nurses, Allied Health, and other healthcare professionals can buy with just 10% deposit and avoid LMI penalties. 



  1. Offset Account


  • What it Means: A savings account linked to your home loan that reduces the amount of interest you pay.

  • Why It Matters: Instead of earning interest on your savings, the balance offsets your loan principal, saving you money on interest.

  • Quick Example: If you owe $300,000 but have $20,000 in an offset account, you’ll only pay interest on $280,000.



  1. Fixed vs. Variable Rate


  • What it Means:

    • Fixed Rate: Your interest rate stays the same for a set period (e.g., 1–5 years).

    • Variable Rate: Your interest rate can change based on market conditions.

  • Why It Matters: Fixed rates offer stability, while variable rates provide flexibility (e.g., extra repayments).

  • Quick Tip: Some lenders offer split loans, combining both fixed and variable rates.



  1. Lenders Mortgage Insurance (LMI)


  • What it Means: Insurance that protects the lender if you default on the loan. It’s required if your deposit is less than 20%.

  • Why It Matters: LMI can add thousands to your costs, but some professions (like healthcare workers) may qualify for LMI waivers.

  • Quick Tip: Save at least a 20% deposit to avoid LMI, or check if you qualify for an exemption.

  • Healthcare Lending Advantage: Doctors can borrow with as little as 5% deposit without paying LMI, while Nurses, Allied Health, and other healthcare professionals can buy with just 10% deposit and avoid LMI fees. This can save applicants tens of thousands of dollars. 



  1. Pre-Approval


  • What it Means: An initial agreement from a lender that specifies how much they’re willing to lend you.

  • Why It Matters: Pre-approval helps you understand your budget and shows sellers you’re serious.

  • Quick Tip: Gather documents like payslips and bank statements before applying to streamline the process.


 


Healthcare Lending Advantage


Healthcare professionals, including doctors, nurses, allied health, and any other workers in the healthcare sector, have access to exclusive lending benefits. These include:

  • Increased borrowing capacities: Enabling you to secure higher loan amounts compared to standard borrowers.

  • Faster loan approvals: Streamlined processes tailored to your profession.

  • LMI waivers: Allowing eligible professionals to avoid costly Lenders Mortgage Insurance with lower deposits.

These advantages are designed to make your journey to homeownership smoother and more accessible, reflecting the critical role you play in our communities.


 

Understanding these key terms is the first step to making informed decisions about your home loan.


Follow us on Instagram for more tips and updates—we’re here to keep you informed every step of the way.


Get started today!




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