Buying your first home can feel like stepping into a whole new world of confusing terms and fancy jargon – Section 32? Lenders mortgage insurance? Industry experts may forget to clue you in on what these terms mean and how they will impact your sale.
But don’t worry, we’ve got your back. To save you from sneaky Google searches mid-meeting, we’ve pulled together a simple cheat sheet of must-know terms.
We’ve broken it down into three categories below:
- Figuring Out Those Finance Terms
- Understanding Your Block of Land
- Honing Your Home Build Knowledge
And after that? Knowledge is power, baby. Before you know it, you'll be skimming through the pages of the Australian Financial Review while you eat breakfast in your dream home, planning your next big move on the property ladder.
1. Figuring Out Those Finance Terms
Appraisal
An appraisal is an estimate of a property's value in the current market. Appraisals take into account things like property size, location, number of bedrooms, fixtures and fittings, and are often performed by real estate agents for free. Note: an appraisal is different from a property valuation, which is a written report prepared by a professional, who will often charge a cost for this service.
Asset
Once you’ve raised the funds to buy or build your first home, you’ll likely have a significant debt in the form of a mortgage. But here’s the good news — this is what’s known as good debt. Your home, whether fully paid off or not, is considered an asset. This asset is taken into account when applying for new credit, filing your taxes, or buying a second property for yourself as an investment. The longer you own your home and chip away at your mortgage, the stronger your asset becomes, building your overall financial position.
Bank of Mum and Dad
You’ll often hear this phrase in conversations about first-home buyers. It refers to parents stepping in to help their kids get onto the property ladder, typically by contributing to the deposit. Unlike traditional loans, this may or may not have to be repaid, depending on the agreement. But if it does, the repayment terms are usually much friendlier than a bank’s. It’s a common move in a tight property market.
Borrowing Capacity
The amount of money that a bank or other lender will loan to you. There are plenty of things that factor into your borrowing capacity – existing loans, annual salary, monthly expenses, if you're buying alone or as a couple etc. Check out our Borrowing Power Calculator for an estimate on how much a bank or lender might allow you to borrow.
Buy Now, Pay Later
This concept has been a game-changer in the property world, thanks to apps like Coposit. It works similarly to Afterpay but for property deposits. Instead of coughing up the full 10% deposit upfront, first-home buyers can pay a smaller amount initially and cover the rest through instalments during the property’s construction period — typically over two to three years. It’s a way to get onto the property ladder faster, but it’s wise to get financial advice before diving in.
Construction Loan
Unlike a traditional home loan, a construction loan doesn’t come as one big payout. Instead, funds are released in stages as each phase of your home build is completed. This setup can help you manage costs better and ensure you’re only paying interest on what you’ve used so far.
Contract of sale
The legally binding agreement between you (the buyer) and the owner of the property (the vendor). This document usually contains:
- Names and addresses of the vendor and the buyer
- Settlement details – including the date you can move in
- Conditions of the sale
- A list of inclusions in the sale such as fixtures and fittings
- Deposit amount
- The sale price
As with any legal document, you should get the contract of sale reviewed by a property conveyancer (see below) or lawyer.
Conveyancer
A legal professional who offers expert advice when it comes to property transactions. Conveyancers can help you when you're buying a property, selling a property, transferring property or subdividing property. For more information on conveyancers and conveyancing, check out our article here.
Conveyancing
This is the fancy legal term for transferring ownership of land or property from one party to another. If you’re buying an existing home, it’s the transfer from the seller to you. If you’re buying a home-and-land package, it refers to transferring ownership of the land from the developer to you. Conveyancing involves legal fees, but it’s a must-do step to make sure everything is legally airtight.
Credit Cards
When you apply for a credit card, the lender checks your credit history to see how responsible you’ve been with past borrowing. If approved, you’ll be assigned a credit limit. Many cards come with an interest-free period, but after that, interest charges kick in on whatever balance you’re carrying. When applying for a mortgage, lenders often prefer you to have minimal credit card debt.
Deposit
Most first-home buyers can’t afford to pay for a house in cash (unless you’ve won the lottery!), so they’ll apply for a mortgage. To get that loan, you’ll need a deposit — usually 10% of the property price — although this amount can vary based on the type of loan or if you’re eligible for government incentives.
Equity
Your equity is the portion of your home that you own outright — essentially, the amount you’ve paid off versus the amount you still owe on your mortgage. Over time, as you make repayments, your equity grows. This equity can be used as leverage when applying for new loans or buying an investment property.
First Home Guarantee
This government scheme helps first-home buyers enter the property market with as little as a 5% deposit* — and without having to pay Lenders Mortgage Insurance (LMI). The government acts as your “guarantor,” giving lenders the confidence to loan you money. However, spots in the scheme are limited, and eligibility criteria apply. *Terms and conditions apply. For more details, click here.
First home-owner grant (FHOG)
A scheme introduced by the Australian government in 2000. The grant varies depending on which state you live in as your state government decides the amount; however, it's usually a one-off payment to assist eligible first home buyers in purchasing a property and breaking into the market. Make sure you read up on what stamp duty concessions you can claim, too!
Click on the appropriate state to be redirected to your state revenue office site to find out more information about the first home-owner grant:
First Home Super Saver Scheme
This federal initiative lets you make voluntary contributions to your super fund (taxed at 15%, which is often lower than regular income tax) to save for a house deposit. Over time, the funds grow faster than in a standard savings account. When ready, you can withdraw up to $50,000 to use as your deposit.
Fixed Interest Rate (or Fixed Rate Home Loan)
A fixed interest rate means you lock in a set rate on your home loan for a set period — typically 1 to 5 years. This offers predictability because your repayments stay the same, regardless of market fluctuations. It’s a great way to shield yourself from rising interest rates, but if rates fall, you’ll miss out on savings.
Genuine Savings
When applying for a home loan, lenders will look for “genuine savings” — a stash of cash that has been sitting in your account, untouched, for 3 to 6 months. It shows lenders that you’re financially disciplined and ready for the commitment of a mortgage.
Government Schemes
Both federal and state governments offer initiatives to make home ownership more accessible. These schemes can reduce your deposit, help you avoid fees like LMI, or offer grants for new builds. It’s worth researching what’s available, as new programs pop up frequently.
Guarantor
If you’re struggling to get a loan, a guarantor can help. By signing on as a guarantor, they promise to cover your repayments if you can’t. The guarantor usually won’t have to front up cash, but they will have to promise they’ll help cover your debts if you default. This extra security can make it easier for you to get approved for a home loan. This is usually a family member who already owns property, but it can also be a state or federal government body through the schemes outlined above.
Home Loan Fees
When you get a mortgage, it’s not just about paying back the loan and interest. You may also face extra fees like annual service fees, valuation fees, or lenders mortgage insurance (LMI) if you have a low deposit. Some lenders waive these fees if you meet certain criteria.
Initial deposit
A percentage of money that is an initial contribution towards the purchase of the property, securing your purchase. The deposit amount and time in which you must pay it will depend on whether you purchase the home at auction, through a private sale, or if you are entering into a building contract.
Interest rate
A fee percentage that you are charged each repayment for taking out a loan. The lender applies this rate against the unpaid portion of the loan.
For example: If you take out a loan for $500,000 over 25 years with an interest rate of 3%, you will end up paying roughly $210,000 in interest. You can have a play around with how repayments might look with our Interest Only Calculator.
Interest rates are influenced by what the Reserve Bank of Australia charges the commercial banks (e.g. Commonwealth Bank, Westpac, etc.) to take out loans – otherwise known as the 'cash rate'. The commercial banks then use this figure to determine the interest rates for the general public.
Lenders mortgage insurance (LMI)
Insurance that you are required to pay if your deposit is less than 20% of the total cost of the property. LMI protects the lender if you can no longer meet your mortgage repayments, and it can be paid upfront or added to the value of your loan.
Loan Establishment Fee
This one-off fee covers the administrative cost of setting up your home loan. It’s also known as an application fee and is usually paid when you sign the mortgage agreement.
Loan-to-Value Ratio (LVR)
LVR is the percentage of a property’s value that you need to borrow. For example, if you buy a home for $500,000 and put down a $100,000 deposit, you’ll need to borrow $400,000 — meaning your LVR is 80%. Lower LVRs (like 60% or 70%) are seen as less risky by lenders.
Market value
A professional opinion on the value of a property and what it would sell for in a competitive market. There are plenty of things factored in when working out the market value of the home, including:
- Location
- Size
- Floor plan
- Quality
- Type
- Comparable sales
- Supply and demand
Mortgage broker
A home loan expert who can help you through the process of financing a new home. Your mortgage broker will provide professional advice and match you with a loan and interest rate, which suits your needs and financial situation.
To learn more about using a mortgage broker, read this article.
Pre-approval
Pre-approval is an early assessment from a lender that estimates how much you can borrow to buy or build a home. The lender reviews your income, expenses, savings, any help from government schemes, and your credit history to determine an amount they’re comfortable lending. While pre-approval isn’t a guarantee, it provides a reliable estimate of your borrowing capacity, helping you narrow your search and approach agents or salespeople with confidence. Pre-approval is typically valid for three to six months, giving you time to explore your options. It’s not a requirement, but it can streamline the home-buying process and reduce the stress of seeking finance later.
Rate Lock
A rate lock allows you to lock in a home loan interest rate before settlement. It’s useful if you’re worried rates will rise before your deal is finalised. If rates drop, most lenders will honour the lower rate, so it’s a bit of a win-win.
Repayments
This is the amount you pay on your home loan each month. It includes both principal (the amount you borrowed) and interest. Your repayment amount depends on your loan type, interest rate, and repayment schedule.
Section 32
A document provided by the seller which details all the information you need to know about the property. It will include:
- The vendor's details
- A copy of the title
- Information about recent building permits
- Zoning certificates
- Notices of upcoming work
- Rates, strata and other fees
- Easements
If you're struggling to understand the details of a Section 32, you should consider engaging a property conveyancer.
Security Guarantee
Similar to a guarantor, a security guarantee is when someone pledges part of their own property as collateral for your home loan, meaning they are also liable if you default on repayments. It reduces the lender's risk and may help you secure a larger loan or avoid LMI.
Settlement
The final stage of a property sale, where you officially become the legal owner. You will pay the vendor the remainder of the contract price and meet all other clauses in the contract of sale.
Settlement period
The length of time before the property is officially handed over to the buyer. This period is usually between 30 and 90 days, allowing you time to organise financing, paperwork, furniture and anything else on your list. Take a look at our Complete Checklist for First Home Buyers, so you know exactly what you need to buy before moving in.
Split Loans
Can’t decide between a fixed or variable rate? A split loan lets you have both. One part of your loan has a fixed rate, giving you predictability, while the other part is variable, allowing you to benefit from market rate drops.
Stamp Duty
A government tax that you need to pay when you buy a property, within 30 days of the settlement date. As a first home buyer, you may be exempt from stamp duty, so make sure you read up on the rules for your state. You'll also save on stamp duty when you choose a home and land package because you only need to pay stamp duty on the land, not the house, which hasn't been built yet.
Variable Interest Rate (or Variable Rate Home Loan)
A variable rate mortgage moves up and down with changes in the Reserve Bank of Australia’s official cash rate. Your monthly repayments will fluctuate, which can be good news if rates drop — but bad news if they rise. You'll need to rely on a mortgage broker or other expert to help decide what's best for you.
3. Honing your home build knowledge
Double-glazing
If you’ve ever felt a cold draft sneak its way in during winter, chances are your home has single-glazed windows – one lonely pane of glass between you and the elements. Double-glazing upgrades this by adding a second pane and a small air gap in between. The result? Better insulation, reduced noise, and a home that’s cosier in winter and cooler in summer.
Façade
They say first impressions count, and your home's façade is the star of the show. It’s the face your home shows the world – including the front wall, windows, garage and front door. Naturally, you’ll want it looking sharp. Local council rules might have a say in how it looks to keep the neighbourhood vibe on point, but with so many stunning façade options, you’ll still be spoilt for choice.
HIA contract
No one loves paperwork, but the HIA contract is important. Backed by the Housing Industry Association, it’s basically a playbook for your home build – locking in all the promises, rights, and expectations for both you and your builder. It includes a cooling-off period and clear rules for what happens if things go pear-shaped. Think of it as your build's rulebook, ensuring everyone’s on the same page.
Home and land packages
Why hunt for a home and a block of land when you can bundle them together? Metricon’s home and land packages do just that – offering you the land and a home in one simple fixed-price package. You will have two contracts to sign – one for the land and one for the house itself. Home and land packages often enable first home buyers to save with confidence as they have a set goal, removing the hassle of battling it out with other first home buyers and investors at auctions.
Inclusions
Ever walked into a display home and wondered, “Do I get all this cool stuff?” That’s where inclusions come in. Depending on the home design you choose, your inclusions might cover everything from the façade style to lighting, taps, and tiles. Higher-end designs tend to have more luxurious inclusions, while entry-level options are more streamlined. Either way, you’ll still get the essentials for a beautiful home.
Orientation
Which way should your home face? No, it’s not a riddle – it’s smart design. Orientation refers to your home's position on the block relative to the sun, wind, and rain. Get it right, and you’ll enjoy more natural light, better airflow, and maybe even smaller energy bills. It’s all about working with nature, not against it.
Render
Your home deserves a jacket too – and that’s where render comes in. It’s a tough outer layer made from sand, cement, and a few secret ingredients to keep your home looking fresh and protected from the weather. A render can also refer to a digital 3D model of your home, so you can get a sneak peek at your dream build before it even begins.
Setbacks
Your block of land might be yours, but you can’t build to the edge like it’s a game of Tetris. Local council rules require “setbacks” – a buffer zone between your home and the street or your neighbours. It’s there to keep the neighbourhood looking tidy, allow room for utility connections, and maintain a little privacy for everyone.
If you’d like to know more about buying your first home, we are here to help. Check out our first home builder resource page, find more advice on our blog or speak to one of our team members today.
2. Understanding your block of land
BAL (Bushfire Attack Level)
If you’re building in a bushfire-prone area, the Bushfire Attack Level (BAL) rating is a big deal. Many Metricon customers building in regional and rural areas will encounter this. A professional assessment is required to ensure your home is constructed with materials and methods that help reduce the risk of fire damage, protecting you in the event of a worst-case scenario.
Building Envelope
Think of the building envelope as the outer "shell" of your home. It includes everything from your external walls (like your beautiful façade) to the roof, base, windows, and external doors. A well-constructed building envelope not only makes your home look good but also ensures it’s weatherproof, energy-efficient, and structurally sound.
Civil Engineering Plan
Before construction can kick off, a civil engineering plan needs to be created and approved by a professional civil engineer. This detailed document covers design, construction, and maintenance requirements to ensure everything is safe, sound, and ready for work to begin. It’s a crucial step on the path to building your dream home.
Cut and Fill
Not every block of land is a perfectly flat blank canvas. Often, it needs a little (or a lot) of reshaping. "Cut and fill" is the process where soil is dug from higher areas of your block and moved to lower areas, leveling out the land to create a stable foundation for your home.
Easement
While your land title shows the area that belongs to you, an easement allows shared access to parts of your property for essential utilities like water, gas, electricity, and sewerage. It’s a practical (and necessary) way to keep everyone connected.
Estate Covenants
If you’re building in a new estate, estate covenants are the ground rules. Created by developers, landowners, and often the local council, these guidelines dictate what you can and can’t do on your block. They influence everything from the look of your façade to the size and type of home you can build.
Fall
If your block of land isn’t perfectly flat, it likely has a "fall" — the difference in height from one end of the block to the other. It can slope up, down, or sideways. The direction and amount of fall impact design decisions and can mean cut-and-fill work is needed to create a level base for your home.
Memorandum of Common Provisions (MCP)
The MCP may sound formal, but it’s just a collection of key documents related to your build. It includes covenants, easements, and other conditions that apply to your land, as well as important details tied to your mortgage. It’s essentially the "starter pack" for your new home journey.
Plan of Subdivision
Dreaming of building two homes on one block? You’ll need a Plan of Subdivision. This plan divides one block into two, creating separate titles for each home. It’s essential for multi-dwelling projects and helps you unlock the potential to live in one and rent out the other.
Retaining Walls
If your block has different height levels, you’ll probably need a retaining wall. This sturdy structure holds back the earth, stopping it from sliding or collapsing. It’s essential when the land next door is higher (or lower) than your block and keeps everything safe, secure, and neatly in place.
Site Costs
Before the first shovel hits the ground, there are site costs to consider. These are the expenses to prepare your land for construction — think cut and fill, utility connections, and groundwork. Site costs are usually estimated upfront but can change if unexpected challenges arise.
Site Coverage
Site coverage refers to how much of your block is covered by your home and other structures (like garages, sheds, and outdoor areas with permanent roofs). Local councils set limits on site coverage to make sure your block isn’t overbuilt, allowing for some green space too.
Titled Land
Before you can build on a block of land, it needs to be "titled". This means local authorities have officially approved it for development. When you buy land from a developer, it might be "untitled", meaning you have to wait for council approval. Once the title is issued, it’s all systems go!
