The parts of a mortgage worth understanding

As a general rule, a deposit of 20% of the purchase price avoids lenders mortgage insurance. Many lenders will lend above that, with LMI added, and some professions and government schemes have different arrangements.

Remember the deposit is not the only cash you need. Stamp duty, legal costs, inspections and lender fees all have to be funded on top of it.

An offset account is a separate transaction account linked to your loan. The balance in it reduces the loan balance interest is calculated on, while the money stays yours to spend as normal.

Redraw is different: extra repayments you have made go into the loan itself, and you ask the lender to release them back. Access can be slower, and the tax treatment differs, which matters if the property might become an investment later.

Neither is better in the abstract. Fixing buys certainty of repayment for a set period, at the cost of flexibility: fixed loans usually limit extra repayments, may not offer a full offset, and can carry break costs if you exit early.

Variable moves with the market in both directions and generally comes with more features. Splitting the loan gives you some of each, which suits households that want partial certainty without giving up flexibility entirely.

A comparison rate folds most of the fees and charges attached to a loan into a single figure, so two products can be compared on more than headline interest alone.

It is a useful sanity check rather than a complete answer: it is calculated on a standard loan amount and term set by regulation, which may look nothing like your loan.

Loan-to-value ratio is the loan amount expressed as a percentage of the property's value. Borrowing $600,000 against a $750,000 property is an LVR of 80%.

It matters because lender pricing, LMI and policy all move in steps as LVR changes. Getting under a threshold can change what a loan costs.

No. Lenders assess serviceability using their own assumptions — they add a buffer to the interest rate, apply a minimum living expense figure, and treat different income types differently.

Overtime, bonuses, commissions, casual work and self-employment are all discounted or assessed differently depending on the lender, which is why capacity can vary widely for the same household.