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How to find the cheapest home loan rate

Want to save thousands of dollars over the life of your loan? Here are five ways to find a cheaper* home loan.

By looking carefully at your home loan's interest rate, fees, features and repayment structure, you can find many ways to save. This page will give you general advice on getting the cheapest loan for your situation. You can also start comparing loans for yourself in the table below.

Home Loan Offer

loans.com.au Essentials - Variable (Owner Occupier, P&I)

3.64 % p.a.

variable rate

3.66 % p.a.

comparison rate

Home Loan Offer

With the loans.com.au Essentials Variable Home Loan, you can enjoy a home loan with no application or ongoing fees as well as a competitive interest rate. You can borrow up to 80% of the property's value. This loan is for owner-occupiers and comes with principal and interest repayments only.

  • Interest rate of 3.64% p.a.
  • Comparison rate of 3.66% p.a.
  • Application fee of $0
  • Maximum LVR: 80%
  • Minimum borrowing: $50,000
  • Max borrowing: $2,000,000
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Compare cheap home loans

Find the lowest interest rate

Calculating your mortgage expenses.Getting a lower interest rate is one of the best ways to save on your loan. Even a difference of a few basis points saves you thousands over a 30-year mortgage. Here are some tips to help you compare rates:

  • Variable versus fixed rates. Variable loans usually have lower rates and offer more flexibility than fixed loans. But you can find very competitive fixed rate loans too. If rates rise while you're still on a fixed loan, you may end up with a more competitive rate.
  • Introductory rate discounts. Look out for loans with discounted introductory interest rates. These might be some of the lowest loans on the market. Just watch out for fees and be ready to switch if your rate jumps up.
  • Non-bank lenders. Loans from smaller, non-bank lenders are more likely to have lower rates. But the mortgage market is so competitive that even the big banks are offering comparably low rates.
  • Negotiating. Once you've chosen a mortgage you can ask for a discount. It never hurts to ask.

Get a loan with low fees

Most mortgages come with fees. These are separate from the interest rate and your repayments, but they are calculated into a loan's comparison rate.

Upfront, one-off fees (like application fees) can seem expensive, but smaller, ongoing fees can cost you more in the long run.

So should I avoid fees at all costs?

Not always. You need to crunch the numbers and work it out for yourself. If a loan has a low rate and features you need (like an offset account), then it might be worth paying the fee.

Some fees only come at the end of the loan or when switching lenders. Keep this in mind if you're planning to refinance (which you probably should).

Get features that save you time (and money)

Home loans with the lowest interest rates often have fewer features. But the right features can help you get more out of your home loan and save you money. It depends on your strategy.

  • Offset accounts. An offset account is a transaction account linked to your home loan. It reduces the amount of interest you're repaying. For example, if you borrow $200,000 and save $10,000 in a 100% offset account, you will only pay interest on $190,000. You can use the offset account funds if you need to spend them, but then you'll have to pay interest on the full amount.
  • Loan portability. This feature lets you move your loan to a new property without the high costs of exiting a loan and taking out a new one.
  • Unlimited extra repayments. Some lenders charge penalty fees when you make extra repayments. The most affordable home loan could be the one that lets you pay it off in your own way, so watch out for repayment fees. Note that while most lenders allow you to pay variable rate home loans off early with no problem, fixed loans will charge a penalty fee known as break costs.

Save a bigger deposit

The bigger your deposit, the less you have to borrow. This makes for cheaper repayments. In some cases, a bigger deposit unlocks lower rates. Most mortgages require a deposit between 5% and 20% of your property's value. If you borrow with a deposit that is less than 20% of your property's value, you will need to pay lenders mortgage insurance on top of your loan.

Having at least 20% of your property's value as a deposit saves you money. If you have a 30% deposit, you could get an even lower interest rate, but that's unrealistic for many home buyers.

Take a closer look at your repayments

Your repayment structure has a big effect on the cost of your loan. Principal and interest loans result in bigger monthly repayments but are cheaper in the long run. Interest-only loans have much cheaper repayments during the interest-only period but higher repayments afterward. This costs you more over time.

Shorter loan periods

The faster you pay off a home loan, the less interest you pay over time. So even though the repayments for a 25-year home loan might look high compared to those of an identical 30-year home loan, the savings would be higher.

Check out the difference in the total cost of two loans below:

A graph showing the savings gained from a shorter loan period.

A 25-year mortgage has higher repayments, but works out to be cheaper in the long run because you pay less interest.

I have a few more questions about getting the cheapest home loan

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Home Loan Offers

Important Information*
loans.com.au Essentials - Variable (Owner Occupier, P&I)

A competitive interest rate home loan with interest only options. Interest rate 3.64%p.a.
comp rate of 3.66%p.a.

UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupied Variable P&I Rate — borrowing $700,000 or more

Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Get $1,000 cash into a USaver account when you apply for a loan of $200,000 or more. Terms and conditions apply.

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤90% ($150K+ Owner Occupier)

Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.

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59 Responses

  1. Default Gravatar
    PoidaJune 12, 2018

    I have a $230,000 mortgage on a $900,000 house.
    I also have a $600,000 inheritance coming when probate currently in progress settles.
    Is there a lender who will give me a line of credit loan 0f $350,000 so I can pay off my present mortgage and have money until probate settles?
    I am currently unemployed.

    • finder Customer Care
      NikkiJune 12, 2018Staff

      Hi Poida,

      Thanks for your message.

      While we can provide you with general information, please note that we’re a product comparison website and we do not represent any company we feature on our site. We’re here to assist you in your buying decision process hence we cannot recommend product / service that is rightfully fit for you.

      Being unemployed may post risks or roadblocks when you apply for refinancing. Before putting in an application, it would best if you talk to a mortgage broker to guide you in this process.

      Cheers,
      Nikki

  2. Default Gravatar
    May 4, 2018

    Hi. I just wanted to know is there any reason why Reduce home loans are no longer on your home loan comparison site ?

    • finder Customer Care
      JoelMay 4, 2018Staff

      Hi Dennis,

      Thanks for leaving a question on finder.

      Reduce Home Loans is not a bank nor a lender. Reduce Home Loans is a licensed and regulated finance brokerage that sources home loans from a variety of Australian lenders. Because Reduce Home Loans is an online-only business, it has low overheads and can offer lower rates. And because it can source funding from a variety of Australian lenders, it can offer competitive products to borrowers. However, we have a dedicated page about RHL here.

      Cheers,
      Joel

  3. Default Gravatar
    stanleyFebruary 20, 2018

    I am looking to purchace a house in the uk, I have a fully owned unit in Sydney with an approximate value of $900,000 . I would require a loan of $300,000 as I am 80 years of age would a loan for this sum be possible.

    • finder Customer Care
      JonathanFebruary 21, 2018Staff

      Hi Stanley, thanks for your inquiry.

      Loans for purchasing property overseas are possible. Some options include:

      -Banks in Australia with foreign branches.
      -Non-Australian owned foreign banks that provide loans.
      -Mortgage brokers in Australia and abroad.

      Since your unit is fully owned, this should be a positive factor in sourcing equity to purchase overseas.

      We would recommend speaking to a licensed mortgage broker to further discuss your options.

      Best,

      Jonathan

  4. Default Gravatar
    May 31, 2017

    cheapest interest on reverse mortgage loan ?

    • Default Gravatar
      JonathanMay 31, 2017

      Hi Peter!

      Thanks for the comment.

      You may use this comparison page that we have for Reverse Mortgage to shop around with the rates from different lenders.

      Just click “More Info” green button if you wish to proceed with a specific lender.

      Hope this helps.

      Cheers,
      Jonathan

  5. Default Gravatar
    JOHNMay 14, 2017

    Looking to refinance a investment unit and pay to off in 4/5 years.
    Pay fortnightly $1300 . Looking for a home loan to achieve this,

    • finder Customer Care
      LouMay 14, 2017Staff

      Hi John,

      Thanks for your question.

      If you are looking for a refinancing home loan for investment properties, you may compare your options on this page.

      Cheers,
      Anndy

  6. Default Gravatar
    ElaineMay 11, 2017

    If you are on a pension and own 90 percent of your home is a loan permitted

    • finder Customer Care
      ArnoldMay 11, 2017Staff

      Hi Elaine,

      Thanks for your inquiry.

      Yes, pensioners are able to apply for home loans. The image below shows what options are available for you.

      Types of Loans

      For information on eligibility, requirements, and application process. You can visit this page. – https://www.finder.com.au/home-loans-for-pensioners

      If you have further concerns you may want to Reach out to a Broker which can give you a professional assessment and will guide you through the application.

      Hope this information helped.

      Cheers,
      Arnold

  7. Default Gravatar
    KateApril 20, 2017

    Hi I’d like to know if there are home loans available for people who are unable to work but plan to return to work in the foreseeable future? Thanks

    • finder Customer Care
      LouApril 20, 2017Staff

      Hi Kate,

      Thanks for your question.

      If you are currently unemployed, the lenders on this page may consider you for a home loan.

      Alternatively, if you are self-employed, you may compare home loan products here.

      If you need assistance in finding a suitable home loan option, you may also get in touch with a mortgage broker.

      Cheers,
      Anndy

  8. Default Gravatar
    PremFebruary 4, 2017

    Will this interest rate go up and down with the interest rate raise and fall or is it a honey moon rate which will go back up over 4% when the honey moon period finish

    • finder Customer Care
      MayFebruary 5, 2017Staff

      Hi Prem,

      Thank you for your question and for contacting finder.com.au we are a financial comparison website and general information service we are not mortgage specialists so can only offer general advice.

      The home loan rates will depend on its type either “variable” or “fixed” rate. If it’s “variable rate home loan” this product has an interest rate which fluctuates up or down over time as your lender sees fit. Your repayments for this type of home loan will also change if the interest rate will change.

      Whilst with “fixed rate home loan”, the interest on your home loan will remain unchanged for the length of your loan term. This means that you’ll know what your repayments will be.

      Cheers,
      May

  9. Default Gravatar
    CuriousDecember 18, 2016

    I was wondering where online banking institutions such as UBank and ING Direct are based and if they are required to follow Australian banking regulations/laws.

    As someone who has always done business with the traditional banks I need to be sure these online banks are reliable and safe.

    • finder Customer Care
      MayDecember 18, 2016Staff

      Hi Curious,

      Thanks for your question.

      Yes, UBank and ING Direct are both registered and are required to follow Australian banking regulations and laws. UBank is an online bank and a division of a division of National Australia Bank Limited (NAB). It has the same credit licence as NAB, which means the loans are underwritten by NAB too. Deposits held within UBank are guaranteed under the Government Financial Claims Scheme and UBank adheres to the Code of banking Practice. The home loan products they offer are listed on this page.

      Whilst ING Direct is wholly owned by ING Group and headquartered in Sydney. They are also regulated by the Australian Prudential Regulation Authority (APRA), like all banks. Their combined savings balances of up to $250,000 per customer are guaranteed by the Australian Government. If you’d like to compare their home loan products, please click this link.

      Cheers,
      May

  10. Default Gravatar
    enlightenedAugust 17, 2016

    Why dont you list the money magazines best home loan winner for 2016. With loan rate of 3.35 Reduce home loans is the clear winner and not even a mention?

    • finder Customer Care
      JodieAugust 30, 2016Staff

      Hi there,

      Thank you for contacting finder.com.au we are a financial comparison website and general information service.

      We appreciate your feedback and will take it on board, however, we list a selection of loans on this page and it is by no means comprehensive if you would like to find out more about how we operate please read our disclaimer.

      With regards to the Reduce Home Loans Rate Buster home loan, it is only suitable for borrowers who have a loan-to-value ratio of under 80% or a minimum deposit of 20% as well as a loan amount below $500,000, whereas we have a range of loans to suit a large selection of customers on this page.

      Thanks again for your feedback we do always like to hear from our users.

      Regards
      Jodie

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