Home Loan Guides
Understand how home loans actually work.
Before comparing lenders or rates, it helps to understand the building blocks of a home loan: how repayments work, what features actually matter, and what lenders look at when assessing an application.
Principal and interest vs interest-only
Most home loans are principal and interest, meaning each repayment reduces the amount you owe as well as covering interest. Interest-only loans keep repayments lower for a set period but do not reduce the loan balance, which usually means higher total interest over the life of the loan.
Fixed vs variable rates
A fixed rate locks in your interest rate for a set period, giving repayment certainty but usually less flexibility to make extra repayments. A variable rate can move up or down with the market and generally allows more flexibility, including offset accounts and unlimited extra repayments.
Comparison rate vs advertised rate
The advertised interest rate does not include fees. The comparison rate factors in most upfront and ongoing fees to give a more complete picture of the loan's true cost, which is why it is worth comparing rather than relying on the headline rate alone.
Offset and redraw
An offset account is a transaction account linked to your loan, where the balance reduces the interest charged. Redraw allows you to access extra repayments you have already made. Both can reduce interest paid, but they work differently and are not available on every loan.
What lenders assess
Lenders typically look at income, expenses, existing debts, credit history, deposit size and the property itself. Understanding this before applying can help you present a stronger application and identify which loan types you are likely to be eligible for.
This information is general in nature and does not take into account your personal circumstances. It is not financial advice or credit advice. Consider seeking professional advice before making a decision.