A home loan, also known as a mortgage, is a type of loan that is designed to help individuals finance the purchase of a residential property. This can be their own home or an investment property.
It is a long-term loan provided by a financial institution, such as a bank or lender. The property is the security for the loan, and lenders require borrowers to save a deposit.
Want more details? Check out Finder's guide on how to buy a house.
Here's a breakdown of features and charges you should know about.
| Feature | What is it? | What you should know |
|---|---|---|
| Interest Rate | The percentage charged by the lender on the amount borrowed. | The higher the interest rate, the higher your repayments will be. |
| Comparison Rate | Designed to help borrowers understand the true cost of the home loan by considering both the interest rate and loan fees. | The comparison rate is based on an example calculation and is not an exact indication of a loan's costs to you. |
| p.a. | This abbreviation of "per annum" is used for home loan interest rates, because the annual (or yearly) value is shown. | While interest is expressed as an annual percentage, most borrowers make monthly or fortnightly repayments. |
| Offset Account | A transaction account linked to a home loan. The balance on the offset account is deducted from the amount owed when calculating interest. | The more money you put in an offset, the less interest your lender charges you. Your monthly repayments stay the same but you can repay the loan faster. |
| Redraw facility | Allows borrowers to access extra funds that they have voluntarily paid towards their mortgage (on top of usual repayments). | Any additional repayments you make will reduce the amount owing on your loan, so when you redraw from those funds the amount you owe will increase again. |
Using some average data from Finder's database and the ABS, we've calculated that an Australian borrower could save around $5,340 with a better rate.
*Rates and averages are current as of April 2024. This is an example calculation only and doesn't take into account loan fees, changes in interest rates or any borrower's individual circumstances.
*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.
You can score up to 25,000 Qantas Points, but is the interest rate good enough?
Ditch the buffering blues or overpriced internet. Compare NBN plans packed with speed and sweet, sweet deals.
Some people with older handsets may miss out.
Offers a 0% introductory rate on balance transfers for 28 months (with a 1% BT fee) and a competitive purchase rate.
Easy Crypto aims to make it easy for anyone to invest in the cryptocurrency markets.
Ethereum ETFs are launching tomorrow - is this the catalyst for a new crypto bull run?
Does "legal tender" mean you can always pay with notes and coins?
Excerpt
Almost a million homeowners could be forced to take drastic action if interest rates remain elevated until next year, according to new research by Finder.
Passport prices have jumped how many times in 7 months?