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St.George Home Loan OfferUp to $4,000 refinance cashback. With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get up $4,000 cashback and borrow up to 90% of the property's value. (Terms, conditions & exclusions apply).
- Interest rate of 2.54% p.a.
- Comparison rate of 2.56% p.a.
- Application fee of $500 (waived for loans above $150,000)
- Maximum LVR: 80%
- Minimum borrowing: $150,000
Compare the latest home loan rates November 2020
Compare mortgage interest rates, fees and offers in the table below. Click on the green buttons 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).
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What is a home loan?
In a nutshell a home loan (or what's sometimes called a mortgage) is the money that is lent to you by a bank or lender that allows you to buy a property. You borrow money from the lender and then repay it with interest charged on top. The money you borrow is called the loan amount or loan principal. The interest your lender charges you is determined by the home loan interest rate.
Australians typically borrow between 80% and 90% of a property's value, although you may be able to borrow more than that. The gap between the loan amount and your property's value is the deposit.
You need to save the deposit yourself, but first home buyers may also have access to grants and government support to help them make up the deposit. Most Australian borrowers will need to save a deposit of 10% to 20%.
A loan term refers to the length of the home loan. A loan term is typically between 25 and 30 years, but you can choose the length yourself and make extra repayments to pay it off faster.
When you compare home loans the interest rate is the first thing you should look at. This 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, an investment property or refinancing an existing loan), your interest rate type, repayment type and which loan features you need.
How do I find the right loan type?
Home loan comparison doesn't just mean finding the lowest rate and applying for that mortgage. There are a few more elements involved in finding the right home loan for you. A good place to start is by looking at your financial situation and the reason for getting a home loan in the first place.
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 you should know that investment loans typically have slightly higher rates than owner occupier loans. In some cases an investor may care less about finding a low interest rate and more about finding a lender with more generous eligibility criteria (making it easier to get your loan approved) or getting a loan with interest only repayments (to minimise your non-tax-deductible costs early on).
If you already have a home loan but want to switch to a better one then you are a refinancer. Home loans for refinancing aren't separate home loan products, so if you currently have an owner occupier loan then you can switch to a new owner occupier loan.
Refinancing means working out your switching costs and then applying for the new loan.
Refinancing can save you thousands of dollars in loan repayments and might only take a few hours of work.
Do I want a fixed or variable interest rate?
You can choose between a fixed or variable rate for your home loan. With rates at historic lows, it's not surprising that many of us are wondering if this is the time to lock down that rate or take a variable option.
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.
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 look like because the rate won't change for the fixed period. If variable rates rise, you have fixed to a lower rate and won't be affected. But if variable rates fall you won't see any benefit.
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.
In terms of costs, both fixed and variable rates are very low right now. In fact, the lowest rates on the market are fixed rate products. But most of the time variable rates are a bit lower than fixed rates.
What 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 interest charges at the same time. This means 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 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 equity and own more of your property. Equity, if you're unaware of the term, refers to the value of your home, minus any debts you owe. 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 make a quick, short-term profit in a rising market, interest only investment loans make sense because interest costs are tax deductible for investors. They can hold the property for a few years, pay as little as possible, and sell for a capital gain.
Some owner occupiers choose to make interest only repayments when they're struggling to cover repayments because of job loss or increased expenses. This is understandable if you are in a tight spot financially for a short period of time. But it's not ideal, because you end up paying more interest.
Here's an example of the difference between the two repayment types.
Principal and interest versus interest only repayments
|Details||Principal and interest||Interest only|
|Loan term||30 years||30 years|
|Interest only period||N/A||3 years|
$933 (during interest only period)
$1,761 (after interest only period)
|Total loan cost over 30 years||$591,688||$604,117|
|Difference in cost||$12,429 cheaper||$12,429 more expensive|
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 the 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).
|Loan term||30 years||30 years|
|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 0.5% 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.
How do I compare mortgage features and fees?
Beyond the interest rate, comparing home loans means looking at fees and the various features that mortgages come with. A loan with the right features gives you more control over your money and unlocks new ways to use your mortgage to your advantage.
The comparison rate does what its name suggests: it helps you compare a home loan. This rate is a home loan's interest rate, plus the cost of fees taken into consideration. It is a legal requirement to be displayed on all loans. But it's only a hypothetical calculation (and not necessarily that helpful any more).
But 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.
Not every home loan comes with the same features, but here are the most common and useful ones:
- Offset accounts. A 100% offset account attached to your home loan is a bank account that lets you save and spend money like a normal savings account. But any dollar saved in the account temporarily offsets your loan amount, meaning you are charged less interest. This allows you the flexibility to save your cash while getting a similar benefit 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 on 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 facilities. The 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 them. In other words, if you've paid off a bit extra on your home loan you can pull that money back out. 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 that means 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 fixed and variable rate types. 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)
Loan-to-value ratio (or LVR) is another way of saying 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 you can get the loan with a smaller deposit, but you will need to pay lenders mortgage insurance (LMI) when your deposit is under 20%.
Unfortunately you're unlikely to go through the mortgage process without paying some fees. You should always factor fees in to your home loan comparison.
Examples of home loan fees include:
- Application fees. This is a one-off fee 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 one or two hundred dollars.
- 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 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 value||10% deposit||20% deposit|
Every lender determines your borrowing capacity with their own formula, so the amount you can borrow will vary. The lender's calculation depends on multiple factors:
- Your income and expenses
- Your debts and liabilities
- Your deposit size
- The value of your property
- Your credit history
- Your employment history
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 focus on paying down any outstanding credit card or personal loan debts.
What happens if I can't make my mortgage repayments?
Being unable to make your home loan repayments is a sign of clear financial distress. Even if you are unable to make your repayments your lender will require you to pay the money back. Delays in payment can see you pay more in fees and interest.
In the worst case, if you can't make repayments then your lender can sell your property to recover the debt. But lenders don't want to do that and it's very much a last resort.
If you are struggling to repay the debt you do have some options. Keep in mind that the following suggestions suit different borrowers and may not be the best decision for you:
- Tell your lender. Be upfront with your lender if you can't make a repayment. Then they can work with you to come up with a solution.
- Consider switching to interest only payments. This is not an ideal situation, but interest only repayments are smaller than principal and interest. Your repayments will become more manageable. But you're not paying off your actual debt, so you're losing money in the long term, and your lender may not agree to you switching to interest only repayments.
- Apply for hardship support. Every lender has some kind of hardship support policies and services. Reach out to your lender and explain your situation.
- Consider a repayment holiday. Temporarily pausing your mortgage repayments is known as a deferral or repayment holiday. This can give you temporary relief from making repayments but your lender will likely charge you interest on top of those deferred payments, and you will have to pay it back eventually.
Is there a big difference between lenders?
There is a large number of 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 the 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.
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 like 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.
Borrowers in unique circumstances may need finance from a specialist lender. This includes bad credit home loans for borrowers with poor credit histories, 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 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 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 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 when enquiring with a lender based on how helpful and responsive they are.
- Application method and speed. If you need a loan organised quickly then an online lender with a fast application process could be a good option. But if you want some face-to-face guidance from a lending specialist then a lender with a local office or branch is the way to go.
- Post-settlement service and mortgage tools. Once you get the home loan your relationship with the lender is just beginning. Check to see if the lender has an app or convenient online service that allows you to track your repayments. If the loan has an offset account check how you can access any money you've saved. The lender may have online banking but no app, for example.
How do I apply for a home loan?
Once you've finished your home loan comparison you will need to apply for a loan. But remember that the mortgage is just one part of the home buying process involving a property search, inspections, conveyancing and much more.
Here's a general breakdown of how the home buying and mortgage journey works (although everyone's own experience looks a little different):
1. Borrowing capacity and deposit
Look at your income and expenses to work out how much you can afford to borrow. Look at prices in the area you are keen to buy in and get a realistic sense of your budget. This step will guide your whole buying journey.
2. Saving a deposit
You will need at least 5% of the property's value saved up. But having a 20% deposit will put you in a much stronger position when you approach a lender.
3. Finding a property
The search for the perfect property can be a long one, but it's important to get it right. Look online, go to as many inspections as you can and find the home or investment that's right for you.
4. Compare home loans
Find a loan that suits your borrowing needs and has a competitive interest rate. You can also consider home loan pre-approval, which is where a lender has a cursory look at your savings, income and expenses and suggests an amount they may be willing to lend you. It's not binding but it can help you know your borrowing capacity while looking for properties.
5. Contract of sale
Once you find your home and your offer or auction bid is successful you will sign a contract of sale. This is the time to talk to a licensed conveyancer who will look over the contract and guide you through settlement.
6. Mortgage application
Once you've bought your property it's time to officially apply for a mortgage. You will need documents to establish your identity, pay slips and account information, plus the property address.
7. Approval and settlement
Your lender approves your application (fingers crossed) and now you wait until settlement day. There's not much to do but wait at this point, although your conveyancer or lender may request additional information from you. Now's a good time to get your home and contents insurance sorted. Then you wait for settlement, the day you legally become the owner of the property and the mortgage begins. Prior to settlement your conveyancer, the seller's conveyancer and the lender's conveyancer will all communicate and perform the necessary legal checks to complete the transfer of the property title, the provision of funds and stamp duty.
8. Get the keys and move in
After settlement the place is all yours. Now you have to focus on paying off your mortgage.
How can a mortgage broker help?
With a little research it's actually pretty simple to find a good home loan yourself. But if you are still a bit confused or have a complicated situation (if you have multiple properties or you're a self-employed borrower) then you can talk to a mortgage broker.
Mortgage brokers in Australia are licensed professionals who can help you compare home loans and find a suitable loan. Brokers can't compare the whole market but they have access to a panel of lenders. A broker will not only help you pick a home loan, they'll also guide you through the paperwork and application all the way to settlement.
The services of a mortgage broker are usually free for the borrower. That's because your lender will pay the broker a commission. Click on the blue button below to organise a chat with a qualified broker. Or you can return to the home loans comparison table at the start of this guide.
More helpful home loan guides
The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our Site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.
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Home Loan OffersImportant Information*
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.
Up to $4,000 refinance cashback. With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get up $4,000 cashback and borrow up to 90% of the property's value. (Terms, conditions & exclusions apply).
A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan.
Take advantage of a low-fee mortgage with a special interest rate of just 2.34% p.a. and a 2.34% p.a. comparison rate.
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