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Get the best home loan for you
Our research shows you could pay up to $95,000 more over the life of your loan if you settle for an average rate. Compare some competitive deals below and find a better home loan rate today.
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We've found some of the lowest rates that match your preferences.
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How much can you save with a lower interest rate?
Using some average data from Finder's database and the ABS, we've calculated that an Australian borrower could save around $95,000 with a better rate.
The average Australian borrower refinances a loan amount of $496,161.
The average variable interest rate loan on Finder is 5.61%. The lowest variable rate is 4.74%.
Assuming a 30-year loan term, if you switched to that lower rate your monthly repayments would drop from $2,852 to $2,586. That’s a saving of about $266 every month, or more than $3,192 a year.
Assuming you refinanced to a new 30-year loan you'd save $95,760 over 30 years.
This is an example calculation only and doesn't take into account loan fees, changes in interest rates or any borrower's individual circumstances.
What is the best home loan for you?
David Smith, chief customer officer of mortgage broking firm Aussie, says when you're deciding which home loan to get, it pays to keep in mind that every borrower is different.
"The first consideration you should make when choosing a home loan is to understand how much you can afford," Smith explains. "That doesn't just mean the maximum amount you can borrow – it also means the maximum you're prepared to pay each month for your loan repayment."
From there, you can plan a budget with your home loan repayments in mind.
"Don't forget, when you purchase a property, there are a number of other upfront costs to cover, including stamp duty – so make sure you factor those extra costs in too," Smith says.
Here are some examples of typical borrowers. While all borrowers are looking for the best home loan to suit them, they all need something a little different.
The cash-strapped first home buyers
Our hypothetical first home buyers Sarah and Ted are in their late 20s and are currently renting. They've squirrelled away their money for 4 years and they've saved up $100,000, but because they live in Sydney, this isn't a very big deposit.
The best home loan for this young couple will ideally be one with the following:
A low interest rate. They cannot afford massive repayments.
A low deposit loan. They probably haven't saved a 20% deposit, so they'll need a loan with a maximum insured LVR of 90% or 95%.
A guarantor option. Alternatively, Sarah or Tom's parents may be willing to guarantee a portion of their deposit, so a loan that allows for guarantors is a great option.
With these criteria, Sarah and Ted find a low rate loan with a high LVR. They ask their lender if it accepts guarantors, which it does. Sarah's parents guarantee 15%, so they only need a 5% deposit and they can avoid paying lenders mortgage insurance. The loan they choose does come with a hefty application fee, but they decide it's worth paying because everything else about the loan is perfect for them.
The cautious investor
In our hypothetical example, Margaret is currently paying off her home. She wants to buy a unit as an investment. She has $400,000 in equity and will use a line of credit loan to cover her deposit. But she'll need an investment loan to buy the unit. She is less concerned with fast capital growth and more concerned with long-term income from rent.
The best loan for Margaret will be one with the following:
Be an investment loan. She cannot purchase an investment property with an owner-occupier loan.
A competitive interest rate. Investment loans have higher interest rates, so she needs to shop around for the best deal.
Limited features. As Margaret doesn't have much left in savings, she isn't able to put money into an offset account, so she doesn't need to pay extra for a full-featured loan that she won't use.
Margaret talks to a mortgage broker who helps her organise the line of credit loan and an investment loan.
The homeowner who is paying too much in interest
David is paying off a $1 million mortgage with a 30-year loan term. He has been repaying the loan for 10 years. David hadn't looked at his interest rate in a while and was shocked to learn that the rate is above 3.60% – when he sees advertisements for other banks and lenders that offer extra features and lower rates.
David wants to refinance to a loan that has the following:
A much lower interest rate. This could save David thousands of dollars a year.
Low fees. David's current mortgage has a hefty discharge fee. He wants to switch to a mortgage that doesn't slug him with more costs.
An offset account. David has managed to put away a bit of extra money while making repayments. He wants to put this cash into an offset account to lower his interest repayments.
David finds a low-fee variable rate home loan that has a 100% offset account. While his previous rate was around 3.60%, his new rate is 2.59%. He's now paying less interest each month.
How do I get the best deal on a home loan?
There are 3 things every borrower needs to look at when hunting for the perfect home loan: rates, fees and features.
The lower the rate, the better
The interest rate determines your borrowing costs, and the lower the rate, the less interest you pay each month.
Let's say your loan amount is $500,000. You choose a variable rate with a 30-year loan term and principal-and-interest repayments (this means you repay the loan amount plus interest at the same time).
The best home loan will always have a lower interest rate because it lowers your monthly loan repayments:
Interest rate
Monthly repayment
3.50%
$2,245
3.25%
$2,176
3.00%
$2,108
2.75%
$2,041
2.50%
$1,975
2.25%
$1,911
2.00%
$1,848
But there's more to a good home loan than the interest rate.
Avoid big fees
Look for a loan that doesn't charge many fees. While home loan fees seem small in comparison to your repayments, they do add up.
Get the mortgage features you need
Home loans with added features can offer you more flexibility in how you repay and manage your loan:
Offset accounts can help you cut down your interest repayments.
Redraw facilities let you take out extra money you've paid into your mortgage to use in emergencies.
Loan portability lets you move your home loan from one property to another without refinancing.
Why the best home loan is different for every borrower
We've explained what the average borrower needs to do to find a great home loan. But every borrower's needs are slightly different. The best home loan for each borrower depends on their short- and long-term plans, and the reason they're buying a property in the first place.
Here are some examples of quite specific borrowers and what they'd need to look at to find the ideal home loan.
A property investor with a mortgage on the family home
Plenty of investors haven't paid their own home loans off yet. While this means having 2 loans at the same time, it opens up some unique opportunities too.
For this type of borrower, the best approach could be as follows:
Make sure your owner-occupier loan has a low interest rate. Focus on repaying this debt as fast as possible. The interest you pay on your home loan is not tax deductible. But it is on your investment loan.
Choose interest-only repayments on your investment loan. This allows you to minimise your investment loan repayments while focusing on your own home loan first. This makes sense because the interest is tax deductible too.
This is just one approach for a property investor to take. Another is to look for a home loan bundle or pivot loan that lets you combine your 2 loans, with a higher rate on your investment loan and a lower rate on your home loan. This can be effective for tax purposes.
A cautious home buyer with plenty of extra money in savings
Let's say you have a 20% deposit and you're looking for a home loan. Obviously, the best loan for you has a low interest rate. But let's say you also have a lot of extra money sitting in your bank account earning very little interest.
And let's say you don't have any desire to invest that money. You want to play it safe. In this case, the best home loan really is one with a 100% offset account.
This means you can park your savings in the home loan and still access it whenever you need it. But by saving the money there, you're cutting down the amount of interest your lender charges you.
You've signed a contract to buy and you're running out of time
If settlement day is fast approaching and you haven't got a home loan approved, the best home loan is the one that a lender will approve quickly.
This could mean a few things. You might abandon the hunt for a better deal and just talk to your own bank. But banks can be slow. You might get faster loan approval with an online lender.
And if you're stuck, a mortgage broker will know which lenders can process your application faster. They can be a real lifesaver when you're running out of time.
Need more help finding a good loan? Talk to a broker
If you haven't got the time or energy to do it yourself, talk to a broker. Mortgage brokers are professionals who have access to a panel of lenders. They can find you a product that matches your financial needs and also help with your application.
At the moment, the home loan market is incredibly competitive. Lenders big and small are offering very competitive rates. In the past, you could usually find the lowest interest rates by looking at online lenders rather than the Big Four. But now the gap between the various lenders is much smaller.
And it's important to look at loan features too. A lender may have the market's lowest rate, but if the loan doesn't allow extra repayments or doesn't have an offset account (and you want one), then it's not the best loan for you.
And if you've bought a house and are racing to settlement day, the best lender for you is the one who can approve your loan in time.
There are many different home loan rates on the market, with different types of loans having higher or lower rates. To get a good sense of what's a competitive rate in the current market, take a look at our current home loan rates guide.
Until recently, home loan interest rates were at record lows. But they have started to rise as inflation has increased and the Reserve Bank has lifted the official cash rate. It's still possible to get a home loan with a rate under 3%.
But rates are expected to rise further, so 3% may soon be considered a good rate again soon.
Many lenders offer very low interest rates on package home loans, especially fixed rate package loans. There is nothing wrong with a package loan. It just means you can combine the home loan with a bank account (that usually offsets your loan interest, saving you money) and a credit card or other products.
The package usually means you can avoid fees on some of the products. But you pay an annual package fee instead. This can cost a few hundred dollars a year. But you pay it every year of the loan.
To work out if a package loan is right for you, be sure to factor in the cost of the package fee. And decide if you really need the other products in the package. It could be a convenient option to have all your banking and loan products in one place. Or you might be better off finding a low rate loan elsewhere and avoiding the package aspect altogether.
It never hurts to ask for a discount. The worst your lender can do is say no. Some mortgage brokers claim they can get discounts for their clients, but you can always ask your lender yourself. It helps to be in a good financial position before asking for a lower rate, of course.
Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification.
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A property investor with a mortgage on the family home
A cautious home buyer with plenty of extra money in savings
You've signed a contract to buy and you're running out of time