The annual fee is a fixed yearly charge for holding a credit card or home loan package. Premium cards with better rewards typically have higher annual fees. Some cards offer $0 annual fee for the first year or waive fees for certain customers.
A rewards card with a $195 annual fee vs. a basic card with $0 fee.
Many savings accounts offer a 'bonus' interest rate on top of the base rate when you meet specific conditions. Common conditions include depositing a minimum amount, not making withdrawals, or growing your balance each month.
Base rate 0.50% + Bonus rate 5.00% = 5.50% total (if conditions met).
The comparison rate combines the advertised interest rate with most fees and charges into a single rate. This helps you compare the real cost of different loans more easily. Note: It's based on a $150,000 loan over 25 years and may not include all fees.
A 5.99% rate with high fees might have a 6.20% comparison rate.
Extra repayments allow you to pay more than your scheduled minimum repayment. This reduces your loan balance faster and can save you thousands in interest over the life of the loan. Some fixed-rate loans limit extra repayments (e.g., $10,000–$30,000 per year) or charge break costs.
Paying an extra $200/month on a $500,000 loan could save ~$80,000 in interest over 30 years.
A fixed rate loan locks in your interest rate for a set period, giving you certainty about your repayments. However, you may face restrictions on extra repayments or offset accounts, and break costs if you exit early.
Lock in 5.99% for 3 years - your rate won't change regardless of market moves.
A guarantor home loan allows a family member (usually a parent) to use equity in their own property as additional security for your loan. This can help you avoid paying Lenders Mortgage Insurance (LMI) and may let you borrow up to 100% of the purchase price. The guarantor is responsible if you default.
Parents guarantee $100,000 of equity so you can buy with no deposit and avoid LMI.
With 'In Advance' interest, the lender calculates and charges interest at the beginning of the loan period rather than at the end. This is less common than 'In Arrears' (where interest is charged after the period). In Advance fixed loans may offer a slightly lower rate, but you pay interest upfront for the upcoming period.
On a 3-year fixed loan In Advance, interest for year 1 is charged on day one.
With an Interest Only loan, your repayments only cover the interest charges. The loan balance stays the same during the interest-only period (typically 1-5 years). After this period, the loan reverts to Principal & Interest with higher repayments.
On a $500,000 loan at 6%, you'd pay ~$2,500/month (interest only).
An introductory rate is a temporary promotional rate offered to attract new customers. It's typically higher than the ongoing rate and lasts for a set period (e.g., 3-6 months). After the intro period ends, the rate reverts to the standard variable rate.
6.00% for 4 months, then reverts to 4.50% ongoing.
Lenders Mortgage Insurance protects the lender (not you) if you default on your loan. It's typically required when borrowing more than 80% of the property value (LVR > 80%). LMI can cost thousands of dollars and is usually added to your loan.
On a $500,000 loan at 90% LVR, LMI might cost $8,000-$15,000.
The Loan-to-Value Ratio (LVR) is the percentage of the property's value that you are borrowing. Banks use LVR to assess risk - the higher your LVR, the riskier the loan is considered. Lower LVR typically means better interest rates and no Lenders Mortgage Insurance (LMI).
Borrowing $400,000 on a $500,000 home = 80% LVR.
Some lenders allow you to link multiple offset accounts to a single home loan. Each account's balance reduces the loan balance you pay interest on. This is useful for separating savings goals (e.g., bills, holidays, emergency fund) while still maximising your interest savings.
Three offset accounts with $10k, $5k, and $3k = $18,000 offset against your loan.
An offset account is a transaction or savings account linked to your home loan. The balance in this account is 'offset' against your loan balance, so you only pay interest on the difference. It's like making extra repayments, but you can still access your money.
$50,000 loan with $10,000 in offset = you only pay interest on $40,000.
With a Principal & Interest loan, each repayment includes a portion that goes toward paying off the loan balance (principal) and a portion that covers the interest. Over time, more of your repayment goes toward principal as the loan balance decreases.
A $2,500 monthly repayment might be $800 principal + $1,700 interest.
A package home loan bundles your mortgage with other banking products (e.g., credit cards, transaction accounts, insurance) at a discounted interest rate. In return, you pay an annual package fee. Packages often include fee waivers on other products and can save money overall — but only if you use the bundled benefits.
A packaged rate of 6.04% with a $395/yr fee vs. a standard rate of 6.19% with no fee.
The purchase rate is the interest rate applied to purchases made on your credit card if you don't pay the full balance by the due date. Interest is typically calculated daily on the outstanding balance. Paying your balance in full each month avoids this charge.
A 20% p.a. purchase rate = ~0.055% interest charged per day on unpaid balance.
A redraw facility lets you withdraw any extra repayments you've made on your home loan. This gives you flexibility - you can pay down your loan faster when you have spare cash, but still access that money if you need it later.
If you've paid $5,000 extra over time, you can redraw up to $5,000.
A split loan lets you divide your home loan into two parts - one with a fixed rate and one with a variable rate. This gives you some certainty from the fixed portion while retaining flexibility from the variable portion.
Split $500,000 into $300,000 fixed (3 years) + $200,000 variable.
A variable rate loan has an interest rate that can change at any time based on market conditions or lender decisions. This means your repayments can increase or decrease. Variable loans typically offer more flexibility with features like offset and unlimited extra repayments.
If the RBA raises rates by 0.25%, your variable rate may also rise.