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.

• *Disclaimer

  * The offers compared on this page are chosen from a range of products finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms "Best" and "Top" are not product ratings and are subject to our disclaimer. The star ratings indicated on this page are from real finder.com.au users based on their feedback about the quality of this page. It is not representative of any product’s star ratings and should not be taken as a recommendation of any form of credit. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.

Home Loan Offer

UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

3.59 % p.a.

variable rate

3.59 % p.a.

comparison rate

Home Loan Offer

Apply for the UBank UHomeLoan Variable Rate - Discounted Offer for Owner Occupier P&I and get a low variable interest rate, plus no application and ongoing fees.

• Interest rate of 3.59% p.a.
• Comparison rate of 3.59% p.a.
• Application fee of $0
• Maximum LVR: 80%
• Minimum borrowing: $200,000

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More info

Start your search for a cheaper home loan now

Compare cheap home loans

• Tic:Toc Live in Loan Variable Rate - Principal & Interest: 3.65% p.a. comparison rate. Competitive variable rate from a 100% online lender.
• Yellow Brick Road Rate Smasher Home Loan: 3.64% 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.
• IMB Budget Home Loan - Special LVR <=90% (Owner Occupier, P&I): 3.69% p.a. comparison rate. A low rate loan available with only a 10% deposit.

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.

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 have a few more questions about getting the cheapest home loan

• Who are the cheapest home-loan providers?

  Online lenders traditionally have the lowest home-loan rates. They have lower costs because they don't operate branch networks. But today, many traditional banks can match or even exceed the competitive home loans offered by these cheaper home-loan providers, so it pays to look at all lenders when seeking a cheap loan.

  Compare online lenders now

• I'm a first home buyer, is there any help out there to make my loan cheaper?

  Some lenders offer special loans tailored to first home buyers that are worth checking out. You can learn more about getting a loan as a first home buyer with our comprehensive guide.

  And don't forget about first home buyers' grants offered by many state and territory governments.

  Find out about first home owners' grants in your state

• I want a cheap home loan, but I need to save a deposit first. How do I save that much money?

  Saving up for your home-loan deposit is a serious challenge for everyone. However, there are ways to trim your expenses, build your deposit and find home loans that don't need large deposits. To master the art of saving with home-loan deposits, you should look at our in-depth, six-part guide to home-loan deposits.

  The ultimate guide to home-loan deposits

• I'm a pensioner. Do you have any advice for me about getting a cheaper home loan?

  Pensioners can face challenges finding a home loan, but there are plenty of options out there. You may face stricter lending criteria and need to provide extra documentation when applying for a loan.

  Read our full guide on home loans for pensioners

• A mortgage rate I've seen looks too good to be true! How can I know if I can trust the lender?

  You should always be comfortable with the lender you're planning on going with. If you're not aware of a lender, try calling them to find out about the company and their service level before lodging an application. Speak to previous customers or read customer reviews on sites like Product Review.

  Keep in mind that little-known lenders might be funded by a larger bank as is the case with NAB-backed UBank or Firstmac-backed loans.com.au.

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