Many first home buyers are confused about all the different terminology used as part of the home loan process. In this article, we have covered some of that jargon to help first home buyers so that they can feel confident when speaking to a mortgage broker or lender.

Comparison rate

This rate can help you identify the true cost of a loan. It is calculated using a formula that includes the interest rate as well as certain fees and charges relating to a loan.

LVR – Loan to value ratio

Percentage of your property value in comparison to the amount of money being borrowed. For example, if you property is worth $725,000 and you are borrowing $580,000, your LVR is 80%.

LMI – Lenders Mortgage Insurance

Lenders Mortgage Insurance is not home insurance policy and is there to protect your lender if you can’t pay your mortgage repayments. This is an additional cost to complete the transaction.


This is the initial contribution you are going to pay towards the purchase. 20% deposit might usually help you avoid the LMI which is an additional cost.

Stamp Duty

Stamp duty is an additional cost which is the tax imposed by state governments on the purchase of real estate assets. Access further information about NSW stamp duty calculator.

It’s very important for first home buyers to think about all the costs involved in buying their first home before committing to something. Depending upon the property price and deposit, you might be able to avoid LMI and Stamp duty. If you are unsure about any of the above, contact us for a free consultation.