Top 6 bank abbreviations that will make it just a little bit easier for you

As Aussies, we love to shorten things. It’s part of our laid-back nature: why say the whole thing when you can just say half of it. Why say afternoon, when we can just say ‘arvo’? Why say Barbeque when we can just say ‘barbie’? Why say a pack of 24 cans of beer, when we can just say ‘slab’?

Banks are just the same; they’ve just take it a bit too far and dropped pretty much all the words and left a couple of letters for us to figure out. So, because we want to make sure that you always know what’s going on, we thought we’d help you out by explaining some of the more common abbreviations that the banks use. So here’s our Top 6

FHOG

This is not the cold mist that rolls through a few times every winter and blocks our view of the Harbour Bridge. This is the First Home Owners Grant. It’s a government scheme in each state where you could receive a discount on state taxes when you buy your first home. You may also be able to receive a cash contribution towards the purchase!

PPR 

Your Principal Place of Residence is your home. It’s your castle. It’s where you live; where you rest your head each night. Sometimes called your Owner Occupied property or OO - which is another bank abbreviation! What It’s not, is an investment property.

IO

This is Interest Only. It’s your loan repayment where you pay only the interest each month, and no Principal. This just means your loan never goes down. Your other option then, is to pay it off. Why would you only pay the interest? Well your accountant might recommend it to assist you with tax planning. Notice we said ‘Accountant’, not the brother of a mate of a friend that you met at a BBQ!

LVR

This is a super mega important term -  Loan to Value Ratio. This ratio is the amount of the loan against the value of the property. e.g. A loan of $400,000 against a value of $500,000 is an LVR of 80%. This LVR generally determines how much the bank likes you; how much they are willing to lend to you; what interest rate they will offer you; what sort or loan conditions that may be included; and whether you need LMI (see below explanation). 80%  is good; 70% is tops (more good); 60% or less is just awesome (the goodest). The lower, the better!

P&I

Another way of saying a regular loan repayment.  Amortisation is another way of saying it. We just prefer to say “pay it off”. But it actually stands for Principle & Interest, meaning you pay the interest & loan off each repayment. When you pay P&I you are normally building equity, mate.

LMI

This is short for Lenders Mortgage Insurance and is an insurance normally paid by you to protect the bank. It covers the bank if you can’t repay your loan and there is not enough money to clear your loan after the bank sells your property. 
Normally this is only required when your Loan to Value Ratio is above 80% (See LVR). It doesn’t protect you or cover you. See: the bank can’t lose!

Now that you have these top abbreviations covered, here’s a couple more that didn’t make our Top 6:

SVR 

The Standard Variable Rate. The bank’s starting home loan rate, before they apply their myriad of discounts, depending on how they feel (see LVR).

BSB

This is the code that identifies the bank of your bank account. BSB is short for Bank, State, Branch, meaning your account is held in what branch in which state of which bank.

E/Fee

A dreaded Establishment Fee.