Home loan vs mortgage — what's the difference?
You've probably heard both terms thrown around like they mean the same thing. They don't — but they're closely related.
A home loan is the money a lender gives you to buy a property. A mortgage is the legal agreement that secures that loan against your property title — meaning if you don't pay it back, the lender has a claim over your property.
In short: you borrow the money (home loan), and the lender registers security over your property (mortgage) to make sure they get it back.
What do you actually need to get started?
A deposit
Before you can apply for a home loan in Australia, you need to contribute a deposit upfront. The minimum is typically 5% of the property value, but the sweet spot is 20% — because once you hit that, you avoid paying Lenders Mortgage Insurance (LMI), which can cost thousands.
If saving 20% feels like a stretch, there are government schemes that can help reduce the amount you need.
Funds for upfront costs
Your deposit isn't the only thing you need cash for. You'll also need to cover stamp duty, legal and conveyancing fees, building and pest inspection costs, and government registration fees. Budget roughly 3–5% on top of your purchase price for these.
How do repayments work?
Every repayment covers two things — principal (what you borrowed) and interest (what the lender charges you for lending it). A standard home loan runs for 30 years, though plenty of people pay theirs off sooner by making extra repayments.
Broker tip
Get a pre-approval early. It gives you a clear budget so when you find the right property, you can move fast and make offers with confidence.
Ready to find out where you stand? Book a free chat with Kick Finance.
