Introduction: Understanding First Home Buyer Jargon

Buying your first home in Australia is exciting—but it can also be confusing with all the unfamiliar financial and legal terminology. From LMI to offset accounts, there's a lot to unpack. This comprehensive A–Z glossary for first home buyers will help you understand the most important terms used in the Australian property and mortgage market in 2025.

Whether you're browsing listings or applying for a home loan, this guide will help you speak the same language as real estate agents, lenders, and conveyancers.

A-Z Glossary of First Home Buyer Terms

A – Additional Repayment

Extra repayments made on top of your regular mortgage payment. These reduce your loan faster and save you interest over time. Great if your home loan offers a redraw facility.

B – Building Inspection

A professional assessment of the property’s structural condition. Essential for identifying hidden issues like damp, cracks, or pest infestations before signing a contract.

C – Conditional Approval (Pre-Approval)

A lender's preliminary agreement to provide a loan based on your financial situation. Useful for house hunting but not a guarantee of final approval.

D – Deposit

The upfront payment (usually 5–20% of the purchase price) paid when signing a contract of sale. A larger deposit can help you avoid Lenders Mortgage Insurance (LMI).

E – Establishment Fee

Also called an application fee, this is a one-time charge by your lender to set up your home loan.

F – Fixed Rate Loan

A home loan where the interest rate remains constant for a fixed term (e.g., 1–5 years). Offers predictability and stability for budgeting.

G – Guarantor

A person (often a parent) who offers their property as security for your loan, helping you buy a home with a smaller deposit.

H – Home Loan Package

A bundled offer from a lender that includes a mortgage, offset account, and credit card with discounted rates and fees.

I – Interest-Only Loan

For a set period, you only pay interest, not the principal. Monthly payments are lower, but you won’t build equity until the principal repayments begin.

J – Joint Tenants

A type of ownership where two or more people own equal shares. If one owner passes away, their share automatically transfers to the other(s).

K – Key Facts Sheet

A document that outlines the key features of your loan, helping you compare different loan products more easily.

L – Lenders Mortgage Insurance (LMI)

A fee charged if your deposit is less than 20% of the property value. It protects the lender, not the borrower, in case of loan default.

M – Market Value

The estimated selling price of a property based on current market conditions and comparable sales in the area.

N – Negative Gearing

When the costs of owning an investment property exceed the income it generates. Can be used to reduce taxable income (commonly used by investors).

O – Offset Account

A transaction account linked to your mortgage. The account balance offsets your loan principal, reducing the interest charged.

P – Pre-Settlement Inspection

A final walkthrough before settlement to ensure the property is in the agreed condition and any repairs have been completed.

Q – Quote for Loan Estimate

A formal document from your lender showing projected repayments, fees, and loan structure before committing to a mortgage.

R – Redraw Facility

Allows you to access extra payments you've made on your home loan. Handy for emergencies or planned expenses without new borrowing.

S – Stamp Duty

A government tax paid when purchasing property. First home buyers may be eligible for stamp duty concessions or exemptions, depending on your state (e.g., NSW, VIC, QLD).

T – Title Search

A legal check confirming who owns the property and any encumbrances or restrictions, like easements or caveats.

U – Unconditional Approval

The lender’s final green light to proceed with your loan after verifying all documentation and property valuation.

V – Valuation

An independent property assessment, usually arranged by the lender, to confirm the property’s worth aligns with the loan amount.

W – Walkthrough

An informal inspection to assess the property’s condition, often done at the beginning and again before settlement.

X – Expense Ratio

Used by lenders to calculate your debt serviceability—how your expenses stack up against your income.

Y – Yield

Often used for investment properties, it refers to the income a property generates annually as a percentage of its purchase price.

Z – Zoning

Local council rules that determine how land can be used—residential, commercial, industrial, etc. Important if you're planning to renovate or invest.

Final Thoughts: Speak the Property Language with Confidence

By understanding these common first home buyer terms, you're taking a huge step toward making informed and confident decisions. Whether you're applying for a mortgage, negotiating with real estate agents, or reviewing a contract, knowing the terminology puts you in control.

📌 Bonus Tip: Bookmark this page or download the glossary as a PDF to refer back to during your property journey.

FAQs: First Home Buyer Terminology in Australia

Q: Do I need a solicitor or conveyancer when buying a home?
Yes! They handle legal processes like title searches, contract reviews, and settlement coordination.

Q: What’s the difference between pre-approval and unconditional approval?
Pre-approval is an estimate of what you might borrow, while unconditional approval means the bank has fully assessed and approved your loan.

Q: Can I avoid paying LMI as a first home buyer?
Yes—either save a 20% deposit or use a guarantor. Some government schemes also help first home buyers avoid LMI.