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UBank UHomeLoan - 1 Year Fixed Rate (Owner Occupier, P&I)

1.75 %p.a.

fixed rate

2.31 %p.a.

comparison rate

UBank Home Loan Offer

Limited time offer.
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees. Apply by 30 June 2021 and settle within 90 days to get this low rate.
  • Interest rate of 1.75% p.a.
  • Comparison rate of 2.31% p.a.
  • Application fee of $0
  • Maximum LVR: 80%
  • Minimum borrowing: $100,000
  • Max borrowing: $1,000,000
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Compare the latest home loan rates June 2021

Compare mortgage interest rates, fees and offers in the table below. Click on the green buttons to find out more about a home loan, or click on the the "Speak to a Mortgage Broker" tab to leave your details and begin an enquiry (don't worry, only the lender or broker will contact you, and Finder won't pass your information on to anyone else).
$
years
Name Product Interest Rate (p.a.) Comp. Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
UBank UHomeLoan Fixed
1.75%
2.31% p.a.
$0
$0 p.a.
80%
$537
Limited time offer.
Fix your mortgage for 1 year with a very competitive rate and no ongoing fees. Apply by 30 June 2021 and settle within 90 days to get this low rate.
Westpac Fixed Option Home Loan Premier Advantage Package
1.99%
3.48% p.a.
$0
$395 p.a.
95%
$554.81
Up to $3,000 refinance cashback.
Lock in a low fixed rate for 2 years and buy your home with a 5% deposit. Eligible borrowers refinancing $250,000 or more can get up to $3,000 cashback. Other conditions apply.
HSBC Fixed Rate Home Loan Package
1.88%
2.86% p.a.
$0
$390 p.a.
80%
$546.6
$3,288 refinance cashback offer
Lock in a low fixed rate for 2 years and buy your home with a 20% deposit. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.
St.George Fixed Rate Advantage Package
1.94%
3.40% p.a.
$0
$395 p.a.
80%
$551.07
Up to $4,000 refinance cashback
Borrowers with 20% deposits or equity can get this competitive fixed rate loan. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
Athena Variable Home  Loan
1.99%
1.99% p.a.
$0
$0 p.a.
60%
$554.81
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees.
Suncorp Home Package Plus Fixed
1.89%
2.85% p.a.
$0
$0 p.a.
80%
$547.35
Lock in a low fixed rate for 2 years. Available with a 20% deposit. Eligible new borrowers can get the annual package fee reimbursed for the life of the loan.
Australian Unity Health, Wealth and Happiness Package Fixed Home Loan
1.89%
2.77% p.a.
$0
$399 p.a.
70%
$547.35
Up to $2,000 cashback.
With a 30% deposit or equity, get access to an 0.10% rate cut and big discounts on credit cards and health insurance. You may qualify for up to $2,000 cashback (Terms, conditions and exclusions apply).
loans.com.au Smart Booster Discount Variable Home Loan
1.85%
2.21% p.a.
$0
$0 p.a.
70%
$544.38
Get a low discounted variable rate loan. Requires a 30% deposit. Get your loan processed fast and settle within 30 days.
Westpac Flexi First Option Home Loan
2.29%
2.72% p.a.
$0
$8 monthly ($96 p.a.)
95%
$577.55
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
Homestar Star Gold
1.79%
1.84% p.a.
$395
$0 p.a.
60%
$539.94
Refinancers and buyers with 40% deposits can get this very competitive variable rate. It even comes with a 100% offset account.
St.George Basic Home Loan
2.49%
2.51% p.a.
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
Get this low-rate variable loan with a 20% deposit and pay $0 application fee. Borrow from $150k (or $250k to be eligible for the cashback offer) (terms, conditions & exclusions apply).
Australian Unity Health, Wealth and Happiness Package Fixed Home Loan
1.99%
2.91% p.a.
$0
$399 p.a.
80%
$554.81
Up to $2,000 cashback.
Borrowers with min. 20% deposits or equity are eligible for this ultra-low rate loan, packed with features. You may qualify for up to $2,000 cashback (Terms, conditions and exclusions apply).
HSBC Home Value Loan
2.44%
2.45% p.a.
$0
$0 p.a.
80%
$589.12
$3,288 refinance cashback offer
Get a low interest variable rate loan with no ongoing fees. Plus you can make extra repayments and free redraw online. If you're refinancing $250,000 or above you can get a $3,288 cashback. Terms and conditions apply.
Well Home Loans Balanced Fixed Home Loan
1.89%
2.18% p.a.
$250
$0 p.a.
90%
$547.35
Owner occupiers can get a sharp fixed rate for the first year, plus an offset account. Available with a 10% deposit.
loans.com.au Smart Booster Discount Variable Home Loan
1.99%
2.47% p.a.
$0
$0 p.a.
80%
$554.81
Home buyers can get a very low discounted variable rate for the first year. This loan has a revert rate of 2.48%. Requires a 20% deposit. Add an offset account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.
UBank UHomeLoan Fixed
1.85%
2.24% p.a.
$0
$0 p.a.
80%
$544.38
A competitive fixed rate loan with no ongoing fees. Requires a 20% deposit.
Greater Bank Great Rate Fixed Home Loan
1.69%
3.49% p.a.
$0
$0 p.a.
110%
$532.6
Get one of the lowest rates on the market with this fixed rate mortgage. NSW, QLD and ACT residents only.
Macquarie Bank Basic Fixed Home Loan
2.09%
2.32% p.a.
$0
$0 p.a.
70%
$562.33
Get a low interest rate and a mortgage with flexible, basic features. No application or ongoing fees. Requires a 30% deposit. Refinancers can switch with a convenient digital application.
Greater Bank Great Rate Fixed Home Loan
1.79%
3.35% p.a.
$0
$0 p.a.
80%
$539.94
A discounted 2 years fixed rate for home buyers. Available with just a 10% deposit. Guarantor option available. NSW, QLD and ACT residents only.
IMB Fixed Rate Home Loan
1.97%
2.81% p.a.
$449
$6 monthly ($72 p.a.)
95%
$553.31
NSW and ACT customers only. 3 years fixed interest terms and free access to redraw facility online. Available with a 10% deposit.
Virgin Money Reward Me Fixed Rate Home Loan
1.98%
2.66% p.a.
$300
$10 monthly ($120 p.a.)
80%
$554.06
$3,000 refinance cashback.
Buy your home and lock in a low rate for the first two years. Get a $3,000 cashback when you switch to Virgin Money with a loan amount of $300,000 or more with an LVR up to 80%. You must apply by 29 August 2021 and settle by 26 November 2021.
Well Home Loans Balanced Variable
2.17%
2.20% p.a.
$250
$0 p.a.
80%
$568.39
A very low interest rate for home buyers with 20% deposits saved. Add an offset account for a small fee.
Bank of Melbourne Advantage Package Fixed Home Loan
1.94%
3.40% p.a.
$0
$395 p.a.
80%
$551.07
Up to $4,000 refinance cashback
Get a competitive home loan rate for two years. Requires at least a 20% deposit. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
loans.com.au Fixed
1.99%
2.70% p.a.
$0
$0 p.a.
80%
$554.81
Home buyers can lock in this low fixed rate for three years. This loan also allows extra repayments. Requires a 20% deposit.
Athena Variable Home  Loan
2.09%
2.02% p.a.
$0
$0 p.a.
70%
$562.33
A low variable rate for owner occupiers with 30% deposits. No upfront or ongoing fees.
Great Southern Bank Fixed Rate Home Loan
2.09%
4.07% p.a.
$600
$0 p.a.
95%
$562.33
Pay no ongoing fees on a fixed rate home loan with flexible repayment options.
UBank UHomeLoan Variable Rate
2.34%
2.34% p.a.
$0
$0 p.a.
80%
$581.39
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
1.98%
3.56% p.a.
$0
$395 p.a.
80%
$554.06
$2,000 cashback for eligible refinancers borrowing $250,000 or more.
Suncorp Home Package Plus Fixed
2.28%
3.15% p.a.
$0
$0 p.a.
80%
$576.78
Borrowers with 20% deposits can lock in a low fixed rate loan for three years. Eligible new borrowers can get the annual package fee reimbursed for the life of the loan.
homeloans.com.au Low Rate Home Loan with Offset
2.14%
2.16% p.a.
$0
$0 p.a.
60%
$566.11
A competitive rate with no application or ongoing fees. This loan is not available for construction.
IMB Fixed Rate Home Loan
2.19%
2.98% p.a.
$449
$6 monthly ($72 p.a.)
95%
$569.91
Lock in a rate for one year and get the ability to make additional repayments for 12 months without penalty. Face-to-face consultations available for NSW and ACT customers. Available with a 5% deposit.
Great Southern Bank Basic Variable
2.49%
2.54% p.a.
$600
$0 p.a.
80%
$593.01
Macquarie Bank Basic Home Loan
2.34%
2.34% p.a.
$0
$0 p.a.
60%
$581.39
Apply for the Macquarie Bank Basic Home Loan - LVR ≤ 60% (Owner Occupier, P&I) and get a low variable interest rate, plus no application and ongoing fees. Requires a 40% deposit.
Suncorp Back to Basics Home Loan
2.44%
2.45% p.a.
$0
$0 p.a.
80%
$589.12
A competitive variable interest rate loan with low fees. The establishment fee is waived if you borrow $150,000 or more.
Bank of Melbourne Basic Home Loan
2.49%
2.51% p.a.
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
A competitive variable rate loan. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
Well Home Loans Balanced Fixed Home Loan
1.95%
2.17% p.a.
$250
$0 p.a.
90%
$551.82
A low fixed mortgage with an optional 100% offset account. Not available for construction purposes.
homeloans.com.au Low Rate Home Loan with Offset
2.24%
2.26% p.a.
$0
$0 p.a.
90%
$573.72
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments. This loan is not available for construction.
BankSA Basic Home Loan
2.49%
2.51% p.a.
$0
$0 p.a.
80%
$593.01
Up to $4,000 refinance cashback
A competitive variable rate loan from BankSA. Refinancers borrowing $200,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
Heritage Bank Fixed Rate Home Loan
2.19%
4.23% p.a.
$600
$8 monthly ($96 p.a.)
95%
$569.91
Get a fixed rate for two years and borrow up to 95%.
Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.28%
3.84% p.a.
$0
$395 p.a.
95%
$576.78
$2,000 refinance cashback
Enjoy a competitive rate with no application fee for this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
IMB Budget Home Loan
2.58%
2.64% p.a.
$449
$0 p.a.
80%
$600.05
A competitive variable rate for borrowers with 20% deposits saved. Available for NSW and ACT borrowers only.
BankSA Advantage Package Fixed Home Loan
1.99%
3.44% p.a.
$0
$395 p.a.
80%
$554.81
Up to $4,000 refinance cashback.
Fix to a low rate for two years and forget about rate rises. Refinancers borrowing $200,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
Well Home Loans Balanced Fixed Home Loan
2.29%
2.29% p.a.
$250
$0 p.a.
90%
$577.55
A competitive 3 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee. Not available for construction purposes.
homeloans.com.au Low Rate Home Loan with Offset
2.69%
2.52% p.a.
$0
$0 p.a.
80%
$608.71
A competitive rate with no application or ongoing fee. This loan is not available for construction.
UBank UHomeLoan Fixed
2.14%
2.35% p.a.
$0
$0 p.a.
80%
$566.11
A one year fixed rate offer with no ongoing bank fees.
Heritage Bank Discount Variable Home Loan
2.59%
2.64% p.a.
$600
$0 p.a.
80%
$600.83
Family guarantee option available. Enjoy flexible repayments and a low minimum loan amount.
Heritage Bank Advantage Package Fixed
2.39%
3.15% p.a.
$0
$350 p.a.
95%
$585.25
Get a partial offset account and flexible repayments with this package loan.
Macquarie Bank Offset Home Loan Package
2.34%
2.62% p.a.
$0
$0 p.a.
60%
$581.39
A sharp variable rate with low fees for borrowers with 40% deposits or refinancers with equity in their properties. Refinancers can switch with a convenient digital application.
loans.com.au Smart Booster Discount Investor Variable Home Loan
1.99%
2.71% p.a.
$0
$0 p.a.
80%
$554.81
If you have an owner occupier loan with loans.com.au you can also get this very low rate variable mortgage for your investment property. Principal and interest repayments. Add an offset account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.
UBank UHomeLoan Fixed
1.99%
2.70% p.a.
$0
$0 p.a.
80%
$554.81
Limited time offer.
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender. Apply by 30 June 2021 and settle within 90 days to get this low rate.
Newcastle Permanent Building Society Real Deal Home Loan
2.59%
2.63% p.a.
$595
$0 p.a.
80%
$600.83
$2,000 refinance cashback
$2,000 cashback for eligible refinancers borrowing $250,000 or more.
St.George Basic Home Loan
2.54%
2.56% p.a.
$0
$0 p.a.
90%
$596.91
$2,000 cashback.
With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get a $2,000 cashback (terms, conditions & exclusions apply)
Macquarie Bank Basic Fixed Home Loan
2.19%
2.42% p.a.
$0
$0 p.a.
80%
$569.91
Borrow up to $750,000 with this basic 3 years fixed rate home loan. Refinancers can switch with a convenient digital application.
Well Home Loans Balanced Fixed Home Loan
2.04%
2.17% p.a.
$250
$0 p.a.
90%
$558.56
A low 3 year fixed rate for home buyers. Add a 100% offset account with a $10 monthly fee. Not available for construction purposes.
IMB Budget Home Loan
2.68%
2.74% p.a.
$449
$0 p.a.
95%
$607.92
NSW and ACT customers only. You can get an interest rate discount for a limited time with this competitive variable mortgage.
homeloans.com.au Low Rate Home Loan with Offset
2.59%
2.61% p.a.
$0
$0 p.a.
90%
$600.83
Save on interest with a free 100% offset account and buy your property with just a 10% deposit. This loan is not available for construction.
Bank of Melbourne Basic Home Loan
2.54%
2.56% p.a.
$0
$0 p.a.
90%
$596.91
$2,000 cashback
A competitive variable rate loan. Refinancers borrowing $250,000 or more can get a $2,000 cashback (Other terms, conditions and exclusions apply).
Well Home Loans Balanced Variable
2.52%
2.55% p.a.
$250
$0 p.a.
90%
$595.35
A very low variable interest rate for borrowers with a 10% deposit. Add a 100% offset account for $10 a month. Not available for construction purposes.
Virgin Money Reward Me Variable Home Loan
2.59%
2.76% p.a.
$300
$10 monthly ($120 p.a.)
60%
$600.83
$3,000 refinance cashback.
A variable rate loan for owner occupiers with a 40% deposit (or equity) borrowing under $500,000. Get a $3,000 cashback when you switch to Virgin Money with a loan amount of $300,000 or more with an LVR up to 80%. You must apply by 29 August 2021 and settle by 26 November 2021.
Athena Variable Home  Loan
2.39%
2.39% p.a.
$0
$0 p.a.
60%
$585.25
Investors with large 40% deposits or equity can get this low variable rate. A competitive option for investors looking to refinance.
UBank UHomeLoan Variable Rate
2.74%
2.74% p.a.
$0
$0 p.a.
80%
$612.67
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
Newcastle Permanent Building Society  Premium Plus Package Fixed Rate
2.19%
3.72% p.a.
$0
$395 p.a.
95%
$569.91
$2,000 refinance cashback
Enjoy a discounted fixed rate and the ability to package the loan with other financial products. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
Athena Variable Home  Loan
2.49%
2.43% p.a.
$0
$0 p.a.
70%
$593.01
Athena's refinance offer for investors and owner occupiers.
Newcastle Permanent Building Society Fixed Rate Home Loan
2.29%
3.94% p.a.
$0
$0 p.a.
95%
$577.55
$2,000 refinance cashback
Borrow up to 95% LVR of the value of the property you're buying and pay no ongoing fees. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
UBank UHomeLoan Fixed
2.09%
2.60% p.a.
$0
$0 p.a.
80%
$562.33
Pay no ongoing fees on this competitive investment loan and fix your rate for 3 years.
Newcastle Permanent Building Society Fixed Rate Home Loan
2.38%
4.11% p.a.
$0
$0 p.a.
95%
$584.48
$2,000 refinance cashback
Competitive fixed rate for home buyers.Available with a 10% deposit.$2,000 cashback for eligible refinancers borrowing $250,000 or more.
Athena Variable Home  Loan
2.59%
2.48% p.a.
$0
$0 p.a.
80%
$600.83
A competitive investor variable rate that falls as you build equity.
Newcastle Permanent Building Society Premium Plus Package Home Loan
2.94%
3.34% p.a.
$0
$395 p.a.
80%
$628.65
$2,000 refinance cashback
New borrowers or refinancers can get a discounted rate with this package loan. $2,000 cashback for eligible refinancers borrowing $250,000 or more.
HSBC Home Value Loan
2.54%
2.55% p.a.
$0
$0 p.a.
90%
$596.91
A competitive value home loan with no ongoing fee.
UBank UHomeLoan Fixed
2.24%
2.64% p.a.
$0
$0 p.a.
80%
$573.72
Pay no ongoing fees on this investment loan fixed for 3 years.
Macquarie Bank Basic Home Loan
2.49%
2.49% p.a.
$0
$0 p.a.
80%
$593.01
Pay no application and ongoing fees and take advantage of split and redraw options. Refinancers can switch with a convenient digital application.
UBank UHomeLoan Fixed
2.09%
2.30% p.a.
$0
$0 p.a.
80%
$562.33
A competitive 3 year fixed rate with no ongoing bank fees.
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Consultant

What is a home loan?

A home loan, also known as a mortgage, is the money you borrow from a bank or lender to purchase a home or investment property.

When you borrow funds from a lender, you then repay the amount according to a loan repayment schedule and the lender charges you interest.

The money you borrow is called the loan principal. The interest your lender charges you is determined by the home loan's interest rate. In 2020, interest rates dropped to the lowest levels they've ever been, meaning it has never been cheaper to take out a home loan.

How much of a deposit do you need?

Australians typically borrow between 80% and 90% of a property's value, which means you need to save or gather together a deposit worth 10-20% of the property's value. The difference between the loan amount and your property's value is the deposit that you must pay. The percentage of your home's value compared to your loan amount is known as your loan to value ratio (LVR).

For example, if you want to buy a home worth $700,000, you'll need to save $70,000 in order to have a 10% deposit. Or you could save $140,000 for a 20% deposit, which will allow you to take out an 80% loan.

The benefit of an 80% loan is that you won't need to pay Lenders Mortgage Insurance (LMI).

For first home buyers, you may even be able to buy a home with as little as a 5% deposit without paying LMI, as part of the First Home Loan Deposit Scheme.

While most banks want to see evidence of genuine savings for your home loan deposit, first home buyers may also have access to other grants and government support to help them make up the deposit.

What is a typical home loan term?

A typical loan term for Australian home loans is 30 years, although you may be able to arrange a loan term of between 25 and 40 years. It may be possible to work with your bank or lender to choose a different length loan term, and with some loans you are able to make extra repayments to pay your home off faster.

Infographic explaining how a home loan works.

How do I avoid paying too much for my home loan?

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When you compare home loans, the interest rate is often the first thing borrowers look at. Obviously, the interest rate has the biggest impact on your repayment costs.

But it's also important to look at other details, such as the purpose of your loan (whether you're buying a home or an investment property or you're refinancing an existing loan), your interest rate type (fixed or variable), your repayment type (principal and interest or interest only), and which loan features you need.

There are a few more elements involved in finding the right home loan for you. Ask yourself the following questions:

Why do I need a home loan?

The reason you need the home loan is going to determine the type of home loan you can apply for. If you're borrowing money to buy a home to live in you'll need an owner-occupier mortgage. If you're buying an investment property you're looking for an investment loan.

If you're looking to buy an investment property, keep in mind that investment loans typically have slightly higher rates than owner-occupier loans. In some cases, an investor may be less focused on finding the lowest possible interest rate, and more interested in finding a lender with more generous lending criteria so that it's easier to get their loan approved.

If you already have a home loan and you haven't reviewed it or made any changes in the last 12 months, it may be time to consider refinancing.

When you refinance your loan, you're essentially transferring your debt from one lender to another. There are a number of home loans for refinancing on the market right now that not only offer competitive interest rates, but that also offer a mortgage cashback of between $2,000 and $4,000, simply for moving your loan.

Of course, before you refinance, you should work out any switching costs before applying for the new loan. Refinancing can save you thousands of dollars in loan repayments, and might only take a few hours of assembling paperwork and payslips to achieve.

Do I want a fixed rate or a variable rate?

You can choose between a fixed or variable interest rate for your home loan. A fixed rate loan is one that has an interest rate that is locked in for a fixed period of time (usually one to five years), while a variable rate can change at the lender's discretion.

Variable rate home loans

Loans with variable interest rates can change at any time and typically offer more flexibility than fixed rates. There are no breaking costs associated with refinancing a variable rate loan, and these loans are more likely to come with features like extra repayments and offset accounts.

Variable rate home loans are more suitable for those who wish to pay off their home loan as quickly as they can, as extra repayments allow you to make more headway with your loan principal.

When it comes to making extra repayments, even small extra contributions add up. For instance, let's assume you have:

  • A loan worth $600,000
  • Your interest rate is 2.5% on a 30-year variable rate loan
  • You make an extra repayment of $100 per week, from day one of having the loan

According to our extra repayment calculator, you would pay off your loan 6 years and 4 months sooner, and save more than $58,000 in interest over the course of the loan.

Fixed rate home loans

With a fixed rate loan you can lock in a specific interest rate for a period of time, typically between one and five years. This means you will know exactly what your repayments will be each month, because the rate won't change for the fixed period.

If your bank or lender increases their variable rate loans, your repayments won't be affected. This applies whether interest rates rise or fall.

Fixed rate loans are less likely to come with offset accounts or allow unlimited extra repayments. And if you want to refinance a fixed rate loan during the fixed period, there is a fixed loan break cost to consider.

In terms of costs, both fixed and variable rates are very low right now. The lowest rates on the market are fixed rate loans, but before you fix, be sure you've considered whether you may wish to sell the property during the fixed rate term. Fixed rate break costs can be very expensive.

Read more about fixed versus variable rates

What home loan repayment type do I need?

Another decision you'll have to make is your loan's repayment type. You have two options: principal and interest or interest only.

  • Principal and interest repayments. With a principal and interest home loan you repay the money you have borrowed (the loan principal) plus the interest charges at the same time. This means that your monthly repayments are higher, but you're actually paying off your debt and you'll pay less interest in the long run.
  • Interest only repayments. With interest only repayments you can avoid paying off any principal for an early period of the loan. Instead, you just pay the interest charges and ignore the loan principal. But eventually, you'll have to pay the loan back, and making interest only repayments for a while makes the overall loan more expensive.

Most borrowers in Australia opt for principal and interest loans because as you repay the loan, you gradually build home equity and own more of your property. Equity, if you're unaware of the term, refers to the value of your home minus any debt you owe on it. If your home is worth $800,000 and you owe your lender $200,000 then your equity is $600,000.

Why do some borrowers choose interest only loans?

For investors looking to maximise their tax position, interest only investment loans make sense, because interest costs are tax deductible for investors. This means that the entire mortgage repayment is just interest (no principal) and the whole amount can be claimed against your tax. This can help to keep mortgage costs down for landlords.

While interest only repayments don't allow you to make any headway with the loan principal, they do enable you to make progress with other non-tax deductible debts, such as your own home.

For instance, if an investor has an owner occupier home loan and an investment home loan, they may be better off paying the minimum possible amount (i.e. only the tax-deductible interest payment) on their investment loan. By doing this, they can funnel the extra funds into paying as much as possible off their owner occupier loan.

Some owner occupiers choose to make interest only repayments when they're having trouble covering repayments due to job loss or increased expenses, or perhaps because of a short-term financial change, such as being on maternity leave.

Keep in mind that when you choose an interest only loan, you are making no progress on the principal, so you should think carefully and consider getting professional advice from an accountant before choosing this repayment type. It's a good idea to consider how much rental income you are getting for the property when deciding how much you can afford in mortgage repayments. If the rent doesn't cover the mortgage repayment, an interest only home loan could help to keep your monthly costs affordable.

Here's an example of the difference between the two repayment types:

Principal and interest vs interest only repayments

DetailsPrincipal and interestInterest only
Loan amount$400,000$400,000
Loan term30 years30 years
Interest rate2.80%2.80%
Interest only periodN/A3 years
Monthly repayments$1,644$933 (during interest only period)
$1,761 (after interest only period)
Total loan cost over 30 years$591,688$604,117
Difference in overall cost$12,429 cheaper$12,429 more expensive

Home loan comparison tips from the experts

We spoke to some industry experts for more inside tips on getting a good home loan.

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Susan Mitchell is the CEO of Mortgage Choice, a nationwide network of mortgage brokers and financial advisers.

The common mistakes first home buyers make

"Failure to shop around is one of the biggest mistakes a borrower can make when trying to get a home loan. There is a common misconception that going straight to the lender you bank with is going to get you the best outcome when in reality, borrowers are doing themselves a disservice by not comparing options from a range of lenders to find the best deal for their goals and needs.

"Not getting home loan pre-approval is another mistake many borrowers make. This is especially the case if you are applying for your first home loan. A home loan pre-approval is useful when buying your first home as it helps you understand what property you can afford to buy before you start shopping around."

Prepare your finances before approaching a lender or broker

"Lenders will assess how 'risky' you are to lend money to, so it's important that you show them that you have good money habits. Don't spend more than you earn, cut back on discretionary spending 3-6 months before you apply for a home loan, make sure you've established a savings history so you can demonstrate that you are responsible with your money and can make your home loan repayments each month."

Photograph of mortgage broker Josh Bartlett.Josh Bartlett is a mortgage broker and the managing director of Mortgage Advice Bureau.

Plan for the long term

"A lot of people talk about looking for the house first but they need to understand their finances first.

"You really need to write down your living expenses but also think about what your living expenses are going to look like once you get a mortgage. People's living expenses adjust once they have a mortgage.

"People need to draw up a timeline of their life. Over the next five years what will my life look like? Will I still have a double income? Will I have kids? And they need to structure the loan with that future in mind."

Know your money personality

"It comes down to money personality. If a couple have very different money personalities, say husband and wife where one is very good with their money and one likes to spend, you could structure the loan so they're both happy with how that money is going to be used.

"I'd suggest a loan with a multi offset account, allowing the couple to have their own accounts so they can control their spending in ways they feel comfortable with. As long as everything's going fine they'll still be married in the next five years."

Fixed or variable

"Again it comes down to the individual. Are you OK if your rate fell up or down? Right now, are rates going to go up? Probably not, but we don't have a crystal ball. Would you feel comfortable with a fixed rate of 1.89% for two years? Would you feel comfortable with that certainty?

"You only ever fix it if it makes you feel more comfortable. It's not about beating the banks."

How do I compare home loan interest rates?

A good home loan comparison starts with a careful look at interest rates. The interest rate is a key component of any home loan. The lower the rate, the lower your repayments will be. It's as simple as that.

Here's the difference in repayments between a 3.50% and a 3.00% interest rate (on otherwise identical loans with 20% deposits and principal and interest repayments).

Interest rate3.50%3.00%
Loan amount$400,000$400,000
Loan term30 years30 years
Monthly repayments$1,796$1,686
Savings (monthly)N/A$110 cheaper
Savings (yearly)N/A$1,320 cheaper
Savings (life of loan)N/A$39,600 cheaper

Over 30 years, that little 0.50% difference in the interest rate could save a borrower an enormous $39,600 in interest charges.

Check out Finder's lowest monthly mortgage rate tracker

What counts as a competitive mortgage rate? It can be hard to judge, especially with rates changing so often. Luckily, Finder has made it easier for you.

Every month we analyse all the loans in our database and find some of the lowest home loan rates. The graph below shows the lowest fixed and variable rates for home buyers and investors.

The graph clearly shows the current historic low in home loan interest rates. This is due to multiple factors, including successive cuts to the official cash rate in 2019 and 2020, plus the economic impact of COVID-19.

Learn more about finding a cheap home loan

How do I compare mortgage fees and features?

Beyond the interest rate, comparing home loans means looking at the fees and various features that mortgages come with. A loan with the right features gives you more control over your money and unlocks new ways for you to use your mortgage to your advantage.

Comparison rate

The comparison rate does what its name suggests: It helps you compare a home loan against others. This rate is the home loan's interest rate plus the cost of its fees. It is a legal requirement to be displayed on all loans. But it's only a hypothetical calculation (and not necessarily that helpful).

The comparison rate is a useful reminder to always consider the cost of fees and to keep in mind that interest rates will change over the life of a home loan.

Features

Not every home loan comes with the same features, but here are the most common and useful ones:

  • Offset account. A 100% offset account is a bank account that's attached to your home loan that lets you save and spend money like a normal savings account. However, any dollar saved in the account temporarily offsets your loan amount, meaning you are charged less interest. This allows you the flexibility of saving your cash while getting a similar benefit that you'd see from making extra repayments. If this feature is important to you, make sure your loan has one, as it is not available with every loan.
  • Extra repayments. If your loan allows you to make extra repayments then you can pay it off faster. This will save you in interest charges. These days, most variable rate loans allow extra repayments, although some fixed-rate loans don't. Other fixed-rate loans may allow you to make limited extra repayments, such as a limit of $10,000 per year during the fixed period.
  • Redraw facility. A redraw facility is common on home loans that allow extra repayments. It's a feature that allows you to withdraw your extra repayments from your loan and spend them if you need to. In other words, if you've paid off a bit extra on your home loan, you can pull that money back out again. It's helpful in financial emergencies, but less flexible than an offset account. Some lenders charge a redraw fee or restrict how much of your repayments you can access.
  • Portability. If your loan is portable it means that you can sell your property and buy a new one with the same home loan. You won't need to refinance, which makes life easier.
  • Split facility. Some loans allow you to split your mortgage into both fixed and variable portions. This lets you create a flexible loan that offers the best of both a fixed and variable rate. If interest rates rise, you're partly protected by fixing, and if they fall, your variable portion may fall too.

Loan-to-value ratio (LVR)

The loan-to-value ratio (or LVR) is another way of defining the minimum deposit. Most loans have a maximum LVR of 80%, meaning you need a 20% deposit.

However, many loans also have a maximum insured LVR of up to 95%. This means that you can get the loan with a smaller deposit, but you will need to pay lenders mortgage insurance (LMI) if your deposit is under 20%.

Fees

You're unlikely to go through the mortgage process without paying some fees. You should always factor fees into your home loan comparison.

Examples of home loan fees include:

  • Application fees. This is a one-off fee that many lenders charge during the application stage. This fee can run as high as $600.
  • Ongoing fees. Some loans come with a monthly or annual fee. This can cost around $120 a year or $10 a month. Package loans often have an annual fee of up to $500.
  • Valuation fees. This covers your lender's cost to have your property valued by an expert. It can cost $100 or $200.
  • Legal fees. This covers your lender's conveyancing costs.
  • Discharge fees. A discharge fee is only charged when you end a home loan, either by refinancing or paying off the loan.

How to find the best home loan for you

How much can I afford to borrow?

Borrowers typically save a 10% or 20% deposit. This can be a huge amount of money. Here are some simple examples:

Property value10% deposit20% deposit
$400,000$40,000$80,000
$600,000$60,000$120,000
$800,000$80,000$160,000
$1,000,000$100,000$200,000

Every lender works out your borrowing capacity with their own formula, which means the amount you can borrow will vary between lenders. Their calculations will depend on things like:

To maximise your chances of getting a loan approved, or borrowing more, you should check your credit score in advance, minimise your spending in the months before applying for a loan and pay down any outstanding credit card or personal loan debts.

Estimate your borrowing power with our calculator

Is there a big difference between lenders?

There are many lenders in the Australian mortgage market. They are all regulated in the same way, but they all offer different levels of service and product ranges. That being said, it's still a really good idea to read reviews from other customers to try and gauge the quality of a lender's customer service before applying.

The Big Four banks

The Big Four are the dominant players across Australian banking. Most customers stick with Commonwealth Bank, NAB, Westpac or ANZ. They all offer banking apps, large customer service teams, extensive branch and ATM coverage, and lots of mortgages to choose from. You won't get the absolute lowest rates on earth with the Big Four, but they are always competitive.

But there are many more lenders in Australia.

Other banks

There's more to mortgages than the biggest players, of course. Most Australian cities and regions have smaller local banks with a range of home loans to consider, and they often cover large areas of the country. There are also large lenders with nationwide service and international banks operating locally in Australia.

Credit unions and non-bank lenders

There is an enormous number of Australian credit unions, non-bank lenders, building societies and other institutions that are member-owned. This means they work for their members and don't pay dividends to shareholders. They're often regional and may not have a presence in every state or territory.

These lenders are usually members of the Customer-Owned Banking Association (COBA), which lists 63 member institutions. Here are some of them:

Digital banks, fintechs, neo-banks and online lenders

There are lenders that do business entirely online (with phone support). Lenders such as loans.com.au, Tic:Toc and UBank are examples of online lenders with competitive rates. Some newer players in the market include neobank or fintech lenders like Athena and 86 400, which use apps and big data to offer customers a convenient online mortgage experience.

Specialist lenders

Borrowers in unique circumstances may need finance from a specialist lender. This includes bad credit home loans for borrowers with poor credit histories and bridging finance and reverse mortgages for older borrowers.

Can I trust a smaller lender?

All home loan lenders operating in Australia are regulated. Banks, credit unions, building societies and online lenders are supervised by the Australian Prudential Regulation Authority (APRA) as authorised deposit-taking institutions (ADIs).

Lenders are also subject to the National Credit Code, which is administered by the Australian Securities and Investments Commission (ASIC) under the National Consumer Credit Protection Act (2009).

How to compare lenders

Your choice of lender really depends on which one is offering a competitive home loan that suits your needs, but critical in this comparison is finding a lender that is willing to lend to you.

What does this mean? Basically, a lender is taking a risk by lending you money, and every lender has a different appetite for risk, depending on the borrower's financial history and ability to pay back the loan.

Here are some ways that lenders are different when it comes to your loan application:

  • Property type. Some lenders aren't comfortable lending to people buying apartments in postcodes with a high number of apartment buildings. They see it as a higher risk. They might only lend you 70% of the property value or reject your application.
  • Location. Many lenders only lend to borrowers in specific states, while smaller online lenders may specify something like "metro and regional cities only".
  • Deposit size. If your deposit is below 20%, you'll find that some lenders will look at your application more closely or simply reject your application. Others will happily lend you 90% or more.
  • Borrowing power. Every lender calculates your borrowing power slightly differently. You may find one lender willing to lend you tens of thousands of dollars more than another. Most lenders have borrowing power calculators that you can use to get a better sense of how much they can lend you.

The best way to work out if you have a good chance of being approved is to ask questions before submitting a full application. Let your prospective lender know the postcode you're buying in, your property type and your deposit size (you can provide estimates if you haven't found a place yet but know roughly where and what you are looking for).

If the lender offers home loan pre-approval, then this can be a good way to get a clearer sense of what the lender can offer you before submitting a full application.

There are more factors that borrowers need to consider that are specific to each lender and require you to do some quick research.

  • Customer service. Read reviews online to see what kind of customer service you can expect. You can also judge this yourself based on how helpful and re