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How well do you know your finance jargon? Take our quiz!

The finance industry has a bunch of acronyms and abbreviations that can make the home buying process a little confusing. But they’re not as difficult to understand as you might think. Take our short quiz to see how many you can answer!

Below we’ve listed eight commonly used acronyms and abbreviations in the mortgage and finance industry.

So grab a pen and some paper and test out that noggin of yours!

Quiz time

We’ll give you one point for each acronym you can identify, and an extra point if you know what it means.

1. LVR

2. LMI

3. FHB

4. FHLDS

5. Low Doc

6. DTI

7. ADI

8. FHOG

Once you’ve written down your responses, scroll down for the answers below.

Keep scrolling…

1. LVR: Loan to Value Ratio

LVR is the percentage of the property’s value, as assessed by the lender, that your loan equates to.

For example, if the property you want to purchase is valued at $500,000, and you need to borrow $400,000 to pay for it, the loan is worth 80% of the property value, making your LVR 80%.

2. LMI: Lenders Mortgage Insurance

LMI is insurance that protects the bank or lender in case you can’t pay your residential mortgage.

It’s usually paid by borrowers with an LVR higher than 80% – that is, borrowers with a deposit of less than 20%.

3. FHB: First Home Buyer

This one is pretty self-explanatory. Basically, a FHB is someone who has never purchased property before but is in the process of doing so.

Being a FHB allows you to take advantage of a number of federal and state government schemes and incentives, which we’ll cover below.

4. FHLDS: First Home Loan Deposit Scheme

The FHLDS is a federal government scheme that allows eligible FHBs with a 5% deposit (aka 95% LVR) to purchase a property without paying for LMI.

This can save FHBs thousands of dollars (sometimes even tens of thousands!) and help them enter the property market sooner.

5. Low Doc: Low Documentation home loan

Low doc home loans are often used by self-employed borrowers who find it difficult to provide conventional proof of income. That’s because many self-employed people try to minimise their taxable income to pay less tax, but this creates problems when they try to borrow.

Fortunately, low doc loans don’t require the same level of “documentation” as normal loans and are specifically designed for self-employed people who are capable of servicing a loan.

6. DTI: Debt-to-Income ratio

Your DTI is used by lenders to determine if you can afford to take on any more debt. Basically, it compares your total debt to your gross income.

The formula is: Total Debt / Gross Income = Debt to Income ratio

So if you have a $500,000 home loan (and no other debt), and $160,000 in gross household income, your DTI is 3.125.

7. ADI: Authorised Deposit-taking Institution

ADIs are financial institutions that are licensed by the Australian Prudential Regulatory Authority (APRA) to carry on banking business, including accepting deposits from the public.

They are generally banks, building societies and credit unions.

8. FHOG: First Home Owners Grant

FHOG are generally state government-run grants available to eligible first home buyers to help them get a leg up into the property market.

Typically, they’re in the vicinity of $10,000 to $20,000, and in many states they’re available alongside stamp duty exemptions and federal government initiatives, such as the $25,000 Homebuilder Grant.

How’d you score?

If you scored 1-4: Hey, no worries! We all started out with this score. And to be honest, we enjoy nothing more than helping people embark on their property buying journey.

If you scored 5-8: Have we met before? I’m sure we have. You seem pretty well-versed in the world of property and finance. We should have a chat again soon to discuss your next steps on the property ladder.

If you scored 9-12: You likely either work in the finance industry, are a savvy property investor, or we’ve taught you well! Long story short: you know your stuff!

If you scored 13-16: Ok, so you either work for us, are married to one of us, or you’re one of our competitors sussing us out! If you scored in this range, take a bow!

Last but not least!

If you ever want to clarify anything with us – whether that be acronyms, abbreviations or any other finance topic – then please don’t hesitate to ‘DM’ us (see, we’re down with all kinds of lingo around here!).

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Make it happen

The staff at MAKE Finance Group are experienced and dedicated to providing our clients with exceptional levels of advice and service.

As a full service finance broker, we can save you time and stress as we negotiate with Banks and Financiers on your behalf. Whether it is asset or equipment finance, business finance and advice or even a home loan, we will go to the market on your behalf and find the best possible deal available.

Let us worry about the financials, as we make it happen for you.

Why Partner with Us?

The staff at MAKE Finance Group are experienced and dedicated to providing our clients with exceptional levels of advice and service.

MAKE Finance Group holds sought after commercial lending accreditations and access to a substantial panel of lenders for both Equipment and Business Finance.

As a finance broker MAKE Finance Group saves you time and stress as we negotiate with Banks and Financiers on your behalf. This allows you to keep focused on your business while we do the finance work.

This ensures you receive the best offers with the objective of saving money and increasing profitability.

Testimonials

Here is what a couple of our clients have said about MAKE Finance Group.
  • Geoff at MAKE Finance Group made the process of purchasing an investment property a seamless process. Thanks for your patience Geoff. I would highly recommend Geoff and his team at MAKE for all your finance needs. Cathy, Warrnambool

  • Geoff and Christine helped me from the ground up with acquiring my first home loan, they helped me from the application process all through to small advice on how to take on the new world I've been introduced to. I am honestly glad to have been referred to MAKE Finance Group, I couldn't have found someone as thorough, professional and friendly to have helped me along the way. Paul, Albury  

  • Geoff and the team at MAKE Finance were unbelievably helpful when we needed to refinance our business loan. After a stressful and confusing ordeal with our existing lender, Geoff made re-financing so easy, and it tool very little work from our end to sort everything out. We are so happy with everything sorted and not having to worry about our finance arrangements. We would encourage anyone with any financing needs to go and see Geoff and the team at MAKE Finance, thanks Geoff! Philip and Jenni, Holbrook

  • Thank you to the team at MAKE Finance Group, for helping me purchase my first truck. I cannot thank them enough as they went above and beyond all my expectations and made the whole process easy and stress free, I would highly recommend them to anyone. Rob, Canberra

  • Applying for a business loan (direct through a Bank) was becoming a stressful and difficult task for us as everything had to be discussed over the phone followed by numerous paperwork. Geoff at MAKE Finance Group was our savior. Your personalised service made the application for our business loan & business vehicle loan so easy. We now operate a very successful business & we could not have done this without you. We love your work! Lloyd & Kristy Franchisee of Jim’s Mowing Wodonga East

  • “MAKE Finance Group were an absolute pleasure to deal with. Right from the very beginning, even when we were just asking questions as to how home loans work and how much we could afford, they made the process incredibly easy and put everything into terms that we could understand. There’s a lot involved with buying your first home, but it felt effortless with the superb help from both Jess & Geoff. MAKE Finance Group definitely come highly recommend from us – thanks guys!” Sophie & Zach, Albury

  • “Buying a new car was a big deal for me as I had a very strong love for my only car of 10 years.  I approached MAKE Finance Group to help me source a loan for my new car, and they made me feel 100% positive about making the change, as the process that they followed to obtain the loan was flawless. They came to me which I hugely appreciated, everything was in order and all follow ups and questions were answered without hesitation. I cannot recommend them enough for their professional and friendly service.” Stephanie, Albury

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