🎧 EP 292 - The Home Loan Basics Most Buyers Never Learn
Understanding your mortgage is just as important as getting approved for one. Yet many first home buyers spend months preparing for loan approval, only to realise after settlement that they don't fully understand how their home loan actually works. In this episode, Veronica and Meighan are joined by mortgage broker Jack Elliott from Alcove to unpack the home loan basics for first home buyers. Together, they explain how mortgage repayments work, why your loan balance barely changes in the early years, and the differences between fixed, variable and split home loans. Rather than focusing on complicated financial jargon, they break everything down into practical concepts that every buyer should understand before and after settlement.
💰 How mortgage repayments really work
One of the biggest surprises for new homeowners is discovering where their monthly repayment actually goes. Many people assume that every repayment significantly reduces the amount they've borrowed, but that's rarely the case during the early years of a loan.
Jack explains how mortgage repayments work by breaking each repayment into two parts: the principal, which is the money you've borrowed, and the interest charged by the lender. Understanding a principal and interest home loan is one of the most important foundations of home ownership because it helps explain why your mortgage balance can feel like it's barely moving at first.
Once you understand how repayments are structured, you're in a much better position to make informed decisions about your mortgage instead of simply watching the balance each month and wondering why it isn't falling faster.
📈 Mortgage interest explained
Interest is often one of the least understood parts of a home loan, yet it's also one of the biggest factors influencing how much your property ultimately costs.
In this episode, Jack gives a simple explanation of mortgage interest, including how mortgage interest is calculated and why lenders calculate interest based on your outstanding loan balance. This helps explain why borrowers pay considerably more interest during the beginning of their loan than they do years later.
The discussion also explores why making even small additional repayments can have a meaningful long-term impact. If your goal is reducing mortgage interest or paying off your mortgage faster, understanding how interest works is the first step. Rather than relying on popular mortgage hacks, you'll gain a clearer understanding of why reducing your loan balance sooner can save interest over the life of your loan.
🏦 The truth about fixed, variable and split loans
Choosing the right loan structure is about much more than trying to secure the lowest interest rate.
Jack explains the differences between fixed, variable and split home loans, including the advantages and trade-offs of each option. Rather than suggesting one loan type is always better than another, he encourages buyers to think about their own financial circumstances, future plans and comfort with changing interest rates.
One of the biggest takeaways is that fixing your interest rate isn't necessarily about saving money. Instead, it can provide greater certainty by giving you predictable repayments for a set period, while variable loans offer more flexibility. Understanding these differences can help you choose the loan structure that best supports your financial goals.
📅 Do fortnightly repayments really save money?
It's one of the most common mortgage tips shared online: switch to fortnightly repayments and you'll save thousands in interest.
But as Jack explains, the answer isn't quite that simple.
But as Jack explains, the answer isn't quite that simple.
Whether fortnightly repayments actually help depends on how your lender calculates them. Some lenders effectively create an extra repayment each year, while others simply divide your annual repayments differently, resulting in no additional savings at all.
It's a great reminder that effective mortgage repayment strategies aren't based on social media advice alone. Understanding how your own lender calculates repayments is far more valuable than assuming every strategy works the same way for every borrower.
🛡️ Managing your mortgage for the long term
Your mortgage shouldn't be something you set up once and never think about again.
Throughout the episode, Jack encourages buyers to regularly review their loan, understand how their repayments are working, and adapt their mortgage as their financial circumstances change. Whether your goal is paying off your mortgage faster, building financial security or simply staying in control of your repayments, small decisions made consistently over time can make a significant difference.
More importantly, the conversation shifts the focus away from trying to predict future interest rates and towards understanding the parts of your mortgage that you can actually control. That's often where the biggest long-term financial benefits are found.
🎯 By the end of this episode, you'll have a clearer understanding of the home loan basics, know how mortgage repayments work, understand how mortgage interest is calculated, and feel more confident making informed decisions about your home loan.
Whether you're preparing to buy your first property or you've recently settled, this episode provides practical guidance to help you understand how home loans work and manage your mortgage with confidence for years to come.
Episode Highlights:
01:46 – Understanding How Mortgages Really Work
04:09 – Why Your Mortgage Balance Hardly Changes at First
07:16 – The Truth About Fortnightly Mortgage Repayments
10:15 – Choosing the Right Mortgage Term
14:00 – Who Controls Mortgage Interest Rates?
18:52 – Fixed, Variable or Split: Which Is Right for You?
25:03 – How to Make Your Mortgage Work for You
04:09 – Why Your Mortgage Balance Hardly Changes at First
07:16 – The Truth About Fortnightly Mortgage Repayments
10:15 – Choosing the Right Mortgage Term
14:00 – Who Controls Mortgage Interest Rates?
18:52 – Fixed, Variable or Split: Which Is Right for You?
25:03 – How to Make Your Mortgage Work for You
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Co-Founders
Veronica Morgan & Meighan Wells
Veronica & Meighan are both licensed real estate agents who exclusively help buyers. Together they have nearly 40 years experience as property professionals.
Veronica is principal of Sydney based Good Deeds Property Buyers and is also co-host of The Elephant in the Room property podcast as well as Location Location Location Australia on Foxtel and author of Auction Ready: how to buy property at auction even though you're scared s#!tless!
Meighan is the multi award winning principal of Brisbane based Property Pursuit, chairperson of the REIQ Buyers Agent Chapter & a regular media commentator.
