Get the best home loan for you
Our research shows you could pay up to $63,000 more over the loan term for your mortgage, if you settle for a second-best loan. Compare some competitive deals below and find a better home loan rate today.
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*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.
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.
"It's fair to say it's going to be one of the biggest decisions you'll ever make. It's one of the most complex, too," Smith explains.
"The first consideration you should make when choosing a home loan is to understand how much you can afford. 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 currently renting. They've squirrelled away their money for four 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:
- Have a low interest rate. They cannot afford massive repayments.
- Be 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%.
- Have 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.
Although the idea of saving a big deposit may be intimidating, the First Home Buyers Deposit Scheme means you only need to save a 5% deposit to get your foot on the property ladder.
The cautious investor
Until recently, investors have been accustomed to paying far more than owner-occupiers for their property loans. But that's no longer the case, with very competitive investment loans available, and banks once again vying for investors' business.
"If you're already a homeowner or an investor wanting to refinance or upgrade, housing affordability has never been cheaper than it is today, thanks to these record low interest rates that are expected to stick around for at least another three years," Smith says.
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 a 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 an investment loan. She cannot purchase an investment property with an owner-occupier loan.
- Have a competitive interest rate. Investment loans have higher interest rates, so she needs to shop around for the best deal.
- Have 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
Our final hypothetical example, 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 3.30% – 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 a much lower interest rate. This could save David thousands of dollars a year.
- Has 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.
- Has 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 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 3.30%, his new rate is 2.59%. He's now paying less interest each month.
Importantly, David doesn't refinance to a new 30-year loan term. Because he has been making repayments for 10 years, he refinances to a 20-year term. Because he's not adding any new debt to the loan, his repayments won't go up – in fact, with the interest rate reduction, they should go down. This ensures he will stay on track to be debt-free faster (switching to a new 30-year loan would add 10 years to the loan).
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 best home loan will always have a low-interest rate. The interest rate determines your borrowing costs, and the lower the rate, the less interest you pay each month. Anyone looking for the best home loan deal needs to start with the rate.
Here's how it works. 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 interest rate has a big effect on the 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
A home loan that hits you with multiple fees will probably cost you more than you realise over time. There are one-off, upfront fees such as application or settlement fees. Some home loans charge an ongoing monthly or annual fee.
Most of the time, these fees seem small compared to your repayments, but they do add up. And because many home loans have minimal fees, it's better to avoid fees if you can.
Check a loan's comparison rate to get a better idea of the added cost of fees.
The right loan type for your strategy
It's important to get the right kind of home loan. If you're a property investor, then you need an investment loan. You won't be able to apply for an owner-occupier loan.
You also need to look at your repayment type. Most borrowers go for principal-and-interest loans, where you borrow money and repay it, plus interest. This is the safest way for most borrowers.
But you can also consider an interest-only loan. With this repayment type, you only pay the interest charges at first. But you'll need to repay the full amount later. It costs you less in the short term and more in the long run. It's a popular option for investors, but some homebuyers choose it too.
Mortgage features you need
Home loans with added features can offer you more flexibility in how you manage your loan and make repayments:
- Offset accounts can help you cut down your interest repayments.
- Package loans let you bundle your mortgage with other financial products (transaction accounts and credit cards) for convenience and discounts.
- 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.
Need more help? Talk to a broker.
Finding the right home loan can take a lot of time and energy. Mortgage brokers are professionals who compare home loans from a wide panel of lenders. They can find you a product that matches your financial needs and property strategy and also help you with your application.
Talk to a qualified mortgage broker today.
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Refinancing have to choose Athena or Aussie with Adelaide bank.
Which one better.
Hi Julian,
We can’t make this choice for you. It depends on your goals and needs. To help you decide which one to choose, you can view our guide on Refinancing Home Loans.
It’s worth seeking professional advice from a mortgage broker to get personalized advice and options.
Don’t forget to check the product terms and conditions, and eligibility requirements to make sure that it would suit your needs.
Regards,
Richard
Hello,
I entered details for a fixed investor loan over 10 years (then changed to 15 years) with 60+ % LVR (later changed to 40% then zero), completed all filter options, only to receive nil results.
Changing filter entries to achive a result also scored No Result.
Thanks ,
Tom.
Hi Tom,
You usually won’t get any results if none of the providers listed match your selected criteria. There are very few fixed rate loans offer a 10-year fixed period.
If you have specific requirements for the loan you’re looking for, reaching out to lenders directly or consulting a mortgage broker to discuss the type of loan that will complement your borrowing needs would be a good idea.
I hope this helps!
Cheers,
Richard
Do any lenders in Australia offer a variable rate home loan with a cap, ie; the rate can fall with the market but it can’t increase above a certain rate? Thanks
Hi Tania,
These are known as capped rate loans, and they’re quite unusual in Australia. We don’t have a specific list of lenders that offer capped rate mortgages, but you can check our list of lenders featured on our Variable Home Loan Rates page. You can contact the lenders on loans you’re interested in, to enquire if they can offer a variable home loan with a cap.
Or, it might be worth seeking assistance from a mortgage broker to get personalised advice.
I hope this helps!
Cheers,
Sarah
what is the age limit for loans
Hi Cay,
There is no maximum age limit set for getting a home loan. In fact, people in their 60s and even older may be approved for a home loan. However, when you apply for a mortgage, your lender will assess many criteria, and age can be one of them. They’ll check if you have the income to support the loan, not just now but well into the future.
Regards,
Richard