Buying a home
Do you know the home loan lingo?
11 October 2018
This article is part of the Suncorp Home Buying Guide. A handy selection of articles, calculators and services to help you on your property buying journey.
Buying a home can be a relatively easy process – if you know what you’re doing. But if you are trying to get into the property market, or if it’s been a while since you last bought a home, some of the language you will come across can make you feel dazed and confused.
Offset accounts? Refinancing? Variable home loans? What does it all mean?
The truth is that you probably already know a lot about how buying a home works, it’s just the terminology that might throw you off.
For example, you may not know what LVR is and you may have that deer-in-the-headlights look on your face when someone mentions it. But all LVR is, is Loan to Value Ratio, or how much you have saved compared to how much you need to borrow.
Don’t feel bad. Lots of people don’t know the lingo.
The home buying lingo quiz
Home buying lingo can be confusing. So, we asked six random people... how well do you know the home buying lingo?
Woman 1: ...
Woman 2: Um...
Woman 3: Um...
Woman 5: I have no idea.
What does LMI stand for?
Woman 1: Something insurance?
Woman 3: Oh gosh, what's the... um... (laughs)
Woman 5: I'm going to guess. It is Loan Mortgage Investment?
What does LMI stand for? Lenders Mortgage Insurance
What does equity mean?
Woman 2: I think maybe... things I own? Like, maybe a house in the future, my dog, my pool, my plants.
Man 1: Market value of your property?
Woman 3: Something to do with horses.
What does equity mean? Equity is the difference between the value of an asset and the amount owing against it.
What is pre-approval?
Woman 2: Maybe just like, confirming that you actually have the money as well, before going out and searching for a house and trying to commit to a certain repayment each month?
Woman 3: So, like, I guess when you, like, go on with all your information, and everything, is like, basically okay but you just have to get the final approval?
Woman 4: Yeah.
Woman 5: I think it's just getting approval prior to buying property, or getting a loan.
What is pre-approval? Pre-approval is an agreement, in principle, to loan an amount of money for the purchase of a home that hasn’t proceeded to a full or final approval.
What is the principal of a loan?
Woman 1: I don’t know, when I see the word principal, I think of, school principal. So the guy who loans you the money.
Man 1: ...
Woman 5: ...
Woman 3: Um... like, the main person that does the loan?
What is the principal of a loan? The principal of a loan is the amount that is outstanding on a loan.What is a mobile lender?
Don't worry if some of the home buying lingo stumps you to. This handy home buying language glossary will help you get up to speed in no time.
Read more in the Home Buying Guide:
- What influences how much I can borrow?
- How much do you (really) need for a house deposit?
- Understanding affordability
Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you.