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A home loan is a secured loan where the property acts as collateral. The lender lends you the purchase price (minus your deposit), and you repay it over a set term — typically 25 to 30 years — with interest charged on the outstanding balance.

Principal & Interest vs Interest Only

With a principal and interest (P&I) loan, each repayment reduces what you owe while also covering the interest charged. This is the standard structure for most owner-occupier loans, and the most cost-efficient over the full loan term.

With an interest-only loan, repayments cover just the interest for a set period (typically 1–5 years) without reducing the principal. Monthly repayments are lower during the interest-only period, but the principal doesn't shrink — which means you pay more total interest over the life of the loan. Interest-only suits some investors and short-term strategies, but it's not a free lunch. See our full guide to interest-only home loans →

Loan-to-Value Ratio (LVR)

Your LVR is the loan amount expressed as a percentage of the property's value. An 80% LVR means you're borrowing 80% of the property value (with a 20% deposit). LVR affects your interest rate, your Lenders Mortgage Insurance (LMI) obligations and your loan eligibility. Borrow above 80% LVR without special exemptions and you'll typically pay LMI. See the full LVR guide →

Offset Accounts

An offset account is a transaction account linked to your home loan. The balance in the account offsets — reduces — the principal you're charged interest on. Hold $50,000 in offset on a $600,000 loan and you're charged interest on $550,000. The savings can be significant over time. Offset accounts are generally available on variable loans; fixed loans often don't include them. See how offset accounts work →

Redraw Facility

A redraw facility lets you access any extra repayments you've made above the minimum. So if you've paid $10,000 ahead of schedule, you may be able to redraw that amount if needed. The mechanics and rules vary between lenders — some restrict redraw on fixed loans entirely. See the full redraw guide →

The RBA raised the cash rate by 0.25% in both February and May 2026, bringing it to 4.35% p.a. This is the second consecutive hiking cycle in recent memory, and it's already showing in mortgage repayment stress data. Westpac is forecasting further increases in May, June and August — though forecasts are exactly that.

The big four banks passed on the full April hike. That means anyone on a standard variable rate with a major bank saw their repayments rise again. Non-bank and second-tier lenders have been more competitive on headline rates throughout this period, which is part of why 34,800 borrowers switch lenders each month.

For refinancers: the average borrower who refinanced in the last six months of 2025 secured a rate meaningfully below their rollover rate. The so-called "loyalty tax" — the premium that existing borrowers pay versus new customers at the same lender — remains a live issue. If your rate hasn't been renegotiated since 2023 or earlier, it's worth running through our refinance calculator to see whether switching still makes sense post-hikes.

For fixed-rate borrowers rolling off: a significant cohort who fixed in 2021–22 at historically low rates are now facing roll-off onto variable rates that are 2–3 percentage points higher. This is the single biggest source of refinance activity in the current market.

How LoanGorilla Helps — 100+ Lenders, No Credit Check

Not sure which calculator to start with?

• • Buying your first home → Borrowing Power, then Buying Costs, then Repayment
• • Already own and want lower repayments → Refinance Calculator first
• • Trying to pay the mortgage off faster → Extra Repayments Calculator
• • Comparing multiple loan offers → Comparison Rate Calculator