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.
HSBC Home Loan Offer
HSBC Home Value Loan - Resident Owner Occupier only, P&I
variable rate
comparison rate
HSBC Home Loan Offer
The HSBC Home Value Loan is a low rate loan with no monthly fees. You also get to enjoy premium service from a dedicated HSBC Relationship Manager.
- Interest rate of 3.59% p.a.
- Comparison rate of 3.60% p.a.
- Application fee of $0
- Maximum LVR: 90%
- Minimum borrowing: $50,000
- Max borrowing: $7,500,000
Start your search for a cheaper home loan now
Aussie Home Loans is both a lender and a mortgage broker, and offers a range of services.
- FREE Suburb and Property Report with every appointment.
- Access 3,000+ loans from over 20 lenders.
- Get expert help with your loan application, including paperwork and eligibility.
- Over 1000 brokers who are able to help you in your local area.
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Compare cheap home loans
- Tic:Toc Live in Loan Variable Rate - Principal & Interest: 3.53% p.a. comparison rate. Competitive variable rate from a 100% online lender.
- Yellow Brick Road Rate Smasher Home Loan: 3.58% p.a. comparison rate. A sharp interest rate and low fees.
- Westpac Flexi First Option Home Loan - 2 Years Introductory Special Offer (New Owner Occupier, P&I): 4.42% p.a. comparison rate. Discounted, competitive variable rate with flexible repayments.
- HSBC Home Value Loan - Resident Owner Occupier only, P&I: 3.6% p.a. comparison rate. A low rate loan available with only a 10% deposit.
Five ways to get the cheapest home loan
Find the lowest interest rate
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 25-year mortgage has higher repayments, but works out to be cheaper in the long run because you pay less interest.
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.
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
cheapest interest on reverse mortgage loan ?
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
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,
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
If you are on a pension and own 90 percent of your home is a loan permitted
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.
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
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
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
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
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
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.
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
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?
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
Is U Bank part of NAB and if so why can’t NAB give me the same competitive interests rate with no fees.
Hi Ewen,
Thanks for your question. You’ve come through to finder.com.au we are an Australian financial comparison website and general information service, not actually NAB.
Yes, UBank is an online lender that is backed by NAB. Though the two offer home loan products, they differ in the interest rates for their products, where UBank offers more competitive rates and products as they don’t have physical branches like NAB. NAB is a big bank and offers a wide variety of financial products than UBank. For more information, you may also like to read our article on how home loan lenders differ from each other.
Hope that helps.
Cheers,
May
whilst all these low rates are enticing, I am looking for a line of credit (portfolio loan). This feature has been great but it isn’t clear when looking at other options if this is available. Could you point me in the right direction?
Regards
john
Hi John,
thanks for the question.
You can compare line of credit loans here to get an idea of the rates available for these types of loans.
I hope this helps,
Marc.