Deciphering the Code: A First Home Buyer’s Guide

The world of finance can be a confusing place. There’s lots of big decisions to make, and a lot to learn. 

Working with a Broker is one sure fire way to ease that fear. We’ve got years of experience handling these matters, and can guide you step by step and teach you along the way. 

We try to use easy to understand language wherever possible, but we’ve created this quick reference guide for common acronyms you’ll like come across. You can refer back to it at any time, or just ask us! There’s no such thing as a stupid question and you are not expected to know everything.

AIP – Approval in Principal. Also known as Conditional Approval, or Pre-approval. A Pre-approval will confirm how much you can borrow so that you can start house-hunting.

ATO – Australian Taxation Office. Yep, those guys. Most of the information that you need from the ATO can be downloaded through the MyGov portal.

COS – Contract of Sale. This legal document sets out the terms when you buy or sell a house. The real estate agent will send you the Contract of Sale for you to review with your Conveyancer. Both the Seller and the Buyer need to sign the Contract.

FHB – First Home Buyer. You may be eligible for certain benefits and schemes. We’ll talk you through your eligibility as it’s dependent on which state you purchase and also your purchase price.

FHLDS – First Home Loan Deposit Scheme. This was one of the newer schemes released in 2020. Each year, 10,000 places are available to eligible First Home Buyers. The scheme allows you to borrow up to 95% of the property price without paying LMI. Note that in 2023 the scheme is now called Home Guarantee Scheme (HGS).

FHOG – First Home Owners Grant. First home buyers in NSW might be eligible for a $10,000 First Home Owners Grant if you are building or buying a brand new home.

I/O – Interest Only. This refers to loan repayments that only pay off the interest, the loan amount itself does not decrease. 

LVR – Loan to Value Ratio. The total amount of the loan, in comparison to the value of the property. For example, if a loan is $400,000 against a property worth $500,000 then the LVR is at 80%.

LMI – Lenders Mortgage Insurance. LMI may be payable if you are borrowing more than 80% LVR (see above). LMI is an insurance policy covering the lender if you don’t pay your loan. If the bank cannot recoup their losses by selling the property they are insured. Remember that LMI covers the lender, not you! It’s still important to insure your own interests.

NOA – Notice of Assessment. When you lodge your tax return, you will receive a Notice of Assessment. This sets out your income and tax refund or tax payable for the year.

O/O – Owner Occupied. If you live in the security property, it is owner occupied. If you’re renting it out, it would be investment.

P&I – Principal and Interest. This refers to loan repayments that pay off the actual borrowed amount plus the interest.