How home loan savvy are you? Test your mortgage IQ

The year is winding down, and you’re probably looking ahead to big goals for the new year—maybe even buying or moving house. But before you can pop the champagne on a new mortgage, there’s one final task:  check how home loan savvy you are!

You might surprise yourself with what you already know, and a little knowledge now will set you up perfectly for your property journey next year.

Ready to test your home loan knowledge and finish the year strong? 

Mozo home loan knowledge quiz

1. What does a "Rate Lock" allow a borrower to do?

a) Permanently fix a variable interest rate for the entire 30-year loan term

b) 'Freeze' the interest rate applied for during the settlement period to protect against rate rises

c) Prevent the lender from selling the mortgage to another bank

d) Lock the borrower into a specific lender so they cannot refinance

2. If you miss a mortgage repayment by the due date, you are considered to be in:

a) Default

b) Arrears

c) Debt surplus

d) Bankruptcy

3. What is a "Comparison Rate" designed to help you do?

a) Compare the property values of different houses

b) Understand the "true" cost of a loan by combining the interest rate with fees and charges

c) Compare your credit score against other borrowers

d) Calculate your future capital gains tax

4. Which fee might you pay if you exit a fixed-rate home loan before the fixed period ends?

a) Establishment fee

b) Discharge fee

c) Break costs

d) Serviceability fee

5. What is "Conveyancing"?

a) The process of inspecting a property for pests

b) A legal process involving the transfer of property ownership from one party to another

c) Negotiating the interest rate with a bank

d) Renovating a home to increase its value

6. What is "Lenders Mortgage Insurance" (LMI) primarily designed to do?

a) Protect the borrower if they lose their job

b) Protect the property against fire and theft

c) Protect the lender financially if a borrower defaults on their loan

d) Protect the guarantor from having to pay the loan

7. "Equity" is defined as:

a) The total interest you have paid on the loan

b) The difference between your home's valuation and the outstanding loan balance

c) The deposit you paid at the start of the loan

d) The monthly repayment amount

8. What is an "Offset Account"?

a) A savings account where the balance reduces the interest charged on your linked home loan

b) A separate account used only for paying utility bills

c) An account that freezes your interest rate for a fee

d) A high-interest term deposit account

9. What does "LVR" stand for?

a) Loan-to-Value Ratio

b) Lender Valuation Rate

c) Long-term Variable Rate

d) Liability vs. Return

10. A "Redraw Facility" allows you to:

a) Increase your credit limit automatically

b) Withdraw extra repayments you have made towards your home loan

c) Redraw the architectural plans for your renovation

d) Switch from a fixed rate to a variable rate instantly

11. What occurs on "Settlement Day"?

a) The borrower moves into the property

b) The seller receives the money from the lender and the borrower's loan officially begins

c) The bank approves the loan application

d) The real estate agent takes their commission

12. What is "Negative Gearing"?

a) When the costs of owning an investment property outweigh the returns

b) When your property value decreases below the loan amount

c) Paying off your mortgage faster than the agreed term

d) Switching to a lower interest rate

13. A "Guarantor" is usually:

a) The government providing a grant

b) A real estate agent vouching for your character

c) A close relative who uses their home equity to provide additional security for your loan

d) The bank manager approving your loan

14. What is "Principal" in relation to a loan?

a) The head of the lending institution

b) The total amount of money borrowed, typically the price of the property minus the deposit

c) The main interest rate applied to the loan

d) The final payment made on a mortgage

5. "Serviceability" refers to:

a) The quality of customer service provided by the bank

b) An assessment of your ability to repay a home loan based on income and expenses

c) The cost of maintaining the property

d) The speed at which a loan is approved

16. What is a "Bridging Loan"?

a) A loan specifically for building bridges on rural properties

b) A long-term loan for investment properties

c) A short-term financing option to buy a new property before selling your current one

d) A government loan for first home buyers

17. "Stamp Duty" is:

a) A fee paid to the post office for mailing loan documents

b) A federal tax on bank profits

c) A state and territory government tax paid on land and property purchases

d) An insurance premium for the property title

18. What is a "Repayment Holiday"?

a) A bonus payment made by the bank during Christmas

b) A period where the lender agrees to temporarily suspend your mortgage repayment obligations

c) A vacation paid for by refinancing your home loan

d) A weekend where banks are closed and no payments process

19. "Conditional Approval" differs from "Unconditional Approval" because:

a) It guarantees you will get the loan

b) It is a non-binding agreement subject to you supplying further information and meeting conditions

c) It allows you to bid at auction with 100% certainty

d) It is only for fixed-rate loans

20. What is "Drawdown"?

a) When the property value drops

b) The process of applying for a loan

c) When a lender releases the loan funds to pay the seller on settlement day

d) Sketching the floor plan for a valuation

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