The 6 home loan essentials every buyer needs to look for

Richard Whitten 23 August 2018 NEWS

Couple looking for a home loan.

You always want a low interest rate, low fees and repayment flexibility. But there's more to look for.

Finding the perfect mortgage in the current market is tricky. Lenders are moving rates up and down all over the place. There are more lenders than ever to choose from, and plenty of special offers, features and discounts to sort through.

To make it easy we've nailed down the six essentials every home loan hunter must look for.

1. An interest rate below 3.70%

The lower the interest rate the less interest you pay every month. It's easy. Finding the lowest rate means getting the biggest savings. Right now you can find plenty of mortgages with rates that are under 3.70%.

Loans for investment and other specialised products come with higher rates. Don't settle for a higher rate if you can avoid it. You're just throwing money away.

Crunching those interest rate savings

Say you've borrowed $500,000 over 30 years with principal and interest repayments. How does the rate affect your monthly repayments?

  • With an interest rate of 3.79% you'll be paying $2,326.94 per month.
  • If you had a more competitive 3.59% interest rate you'd be paying $2,270.42 per month.

That's $56 a month in savings. Or $672 a year. Or $20,160 over the 30-year life of your home loan. It really makes a difference.

Check out a competitive 3.59% interest rate right now

2. Low fees

When you're borrowing hundreds of thousands of dollars to buy a house, a $600 application fee seems like small change. But how would you feel if $600 fell out of your pocket?

Avoiding fees is always a good idea, especially heavy application or ongoing fees. If you add these up over time you could be looking at thousands of dollars.

Why pay them if you don't need to?

3. Flexible repayment options

As boring as this sounds, repayment flexibility really adds to the value of a mortgage product. The freedom to make extra repayments whenever you like without penalty makes it easier to pay off your loan faster. This saves you money in fees and interest repayments.

4. Good customer service

It can be hard to judge customer service for a lender if you've never banked with them before. But it's important to consider. Your mortgage will be with you for quite some time. Having a customer-friendly lender who's easy to deal with makes the whole thing easier.

Customer reviews can be a good way to judge a lender's customer service. Awards are another. The 2017 finder awards included a Best Online Customer Service category. The winner was the digital lender UBank.

Speed is another valuable factor. Some digital lenders like Tic:Toc offer "instant" approval through an automated online application process. If you need finance right now that's a life-saving benefit.

5. Rate discounts, special offers or other perks

It's a competitive market. Some lenders offer extra discounts and other enticements to get you in the door (and in debt).

Some rate discounts have a fixed limit, like 12 months, before reverting to a higher rate. Others offer an ongoing discount that could change at any time.

It's worth getting a very low, discounted rate if there are no extra conditions like high fees. But be sure to do your research and keep an eye on the interest rate. If the discount ends and your rate jumps up you should refinance to a lower one.

This is where a mortgage with low fees and a discount rate can be a good option: low fees make it cheaper to switch when the discount ends.

6. Features you need (and none that you don't)

If your mortgage has a 100% offset account you can keep some extra cash in it and offset it against your loan principal. In non-industry jargon that means you can keep the money saved but pay less interest while it's in the account.

A very useful feature if you have money to spare. But loans with this feature often have a higher interest rate or a fee attached. If you don't need an offset account then a lower rate mortgage without one might actually be better.

Other features like split facilities and redraw are great too, but if you don't need them then consider a simple home loan that gets the basics right: low rate, no fees, flexible repayments.

Start comparing home loans now

Many of the loans in the table below satisfy all the requirements we've listed above. It's also important to take into account your own financial circumstances and needs when comparing loans. If you see a product that's right for you hit the green button, follow the link or form and enter your details. This will put you in touch with a lending specialist or broker who will guide you through the application process.

Rates last updated June 19th, 2019
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
$0 p.a.
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees. UBank will cut its variable rates for new and existing customers on June 28, making this rate even lower.
$0 p.a.
A simple mortgage with no application or ongoing fees that has extra repayments plus split and redraw options. Requires a 30% deposit.
$0 p.a.
Get a low interest rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. Available with just a 10% deposit.
$10 monthly ($120 p.a.)
A low fixed rate loan that lets you borrow up to 90% of your property's value.
$395 p.a.
Loans over $150000 get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.
$0 p.a.
Low fee loan with extra repayments. Pay no application and ongoing fees and take advantage of split and redraw options.
$0 p.a.
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments. State Custodians will cut this rate on June 26, making it even lower.
$395 p.a.
Get a low 3 year fixed rate with a 100% offset account and package discounts.
$0 p.a.
A one year fixed rate offer with no ongoing bank fees.
$500 (if over 80% LVR)
$0 p.a.
A competitive variable mortgage for home buyers. This loan has flexible repayments and an optional redraw facility.

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