The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.
Read the full Finder Score breakdown
You’d think it was as simple as looking at the lowest number in the table, right? Well, it can be. But there are some things to watch out for that could make your cheap home loan…not so cheap.
The starting point is to always look at the rate. The lower rate, the lower your repayments.
Some loans lure you in with a cheap attractive rate, but then you find it piles on a huge fee to apply and another fee to pay each month as well. Your cheap rate now costs you more per month than the slightly higher interest rate with no fees.
Comparison rates are normally based on loans of $150,000 so they’re not always helpful. But if the comparison rate is much higher than the actual interest rate, you can bet there are other costs driving your repayments up.
It’s all well and good getting a low interest rate but if you’re sacrificing access to features that could save you money in the long run, it’s not worth it. Take an offset account, for example. Using an offset account will mean you pay down the loan faster because it reduces the amount of interest you need to pay.
The number one factor in determining a cheaper home loan is a low interest rate.
Let's compare 2 otherwise identical home loans with slightly different interest rates.*
| Interest rate | 7.18% | 5.69% |
|---|---|---|
| Loan amount | $634,479 | $634,479 |
| Loan term | 30 years | 30 years |
| Monthly repayment | $4,229 | $3,679 |
| Monthly saving | N/A | $620 |
| Annual saving | N/A | $7,440 |
As you can see, with the lower interest rate, you save $620 a month – or $7,440 a year.
*We're using the average owner-occupier home loan size from the ABS, the average variable rate loan in Finder's database of the full market and the lowest variable rate.
Every month, we analyse the rates in our database to create a list of the market's cheapest loans.
The lowest variable interest rate in Finder’s database is 5.69%
The lowest fixed interest rate in Finder’s database is 5.49%
Interest rates can change depending on your circumstances, but as a guide, here are the cheapest home loans from the big 4.
| Bank | Cheapest Fixed Rate | Cheapest Variable Rate |
|---|---|---|
| ANZ | 6.54% | 6.54% |
| CBA | 6.04% | 6.15% |
| NAB | 5.99% | 6.79% |
| Westpac | 5.89% | 6.74% |
The cheapest variable rate from the big 4 is from CBA's new digital home loan which launched in May 2024. Even so, it's a considerable difference from the lowest variable rate across the market.
The lowest fixed rate however is offered by Westpac. Both NAB and Westpac have dropped their fixed rates over the last couple of months, sparking theories that the cash rate would be dropping soon as well.
Let's do what we do best: compare.
Say you take out a $500,000 loan over 30 years with that 6.15% rate. You'd be paying $3,047 a month in repayments.
But with September's lowest variable rate across the market of 5.69%, you'd only (ha) be paying $2,899. That's a difference of $148 a month, or $1,776 a year.
Your repayments with Westpac's lowest rate of 5.89% would be $2,963 per month - but remember that you'd be locked into that rate even if rates start dropping.
On 06 August the official cash rate was held at:
4.35%
The lowest variable owner-occupier rate on the market is:
5.69%
Assuming the average owner occupier home loan size of $634,479 you would be making monthly repayments of:
$3,679
"I wanted to make sure I have one of the cheapest home loans on the market. So I found an online lender with a consistently low interest rate (I should know, I check rates every month). But I also made the sure the loan had an offset account. For me, being able to build up savings in the offset account speeds up my loan and cuts down my overall interest charges dramatically. This makes the loan much cheaper in the long run."
At a very basic level, the cheapest home loan is the one with the lowest rate. But every borrower has different needs. So beyond a low rate, you need to get a loan that actually helps you achieve your property goals and financial needs.
Home loans are normally taken out for 30 years. But no one wants to spend the next 30 years making those repayments, right? With most variable rate home loans you can actually make extra repayments. By paying more off your loan than the required monthly repayments, you pay off the loan early and pay less in interest.
Fixed rate loans are less likely to allow extra repayments and will probably charge a break fee if you do repay early.
Owner-occupier home loans have the cheapest rates. But they're no good if you're a property investor because you'll need an investment loan.
Most borrowers want a principal and interest loan, but for investors, an interest-only loan offers tax benefits. It’s important to understand your strategy early on. You may be someone that will start off as an owner occupier but then move out and use it for investment (if you have taken advantage of first home owner concessions, for example).
Is it worth going for the cheapest home loan if it doesn't have an offset account?! Well, that's up to you. But considering an offset account could see you paying your loan off early and therefore less in interest, it's a pretty key thing to want to include as part of your loan. An offset account is essentially a bank account attached to your mortgage. Instead of earning interest, it reduces the interest you'll pay.
Let's say you have $100,000 in your offset account and you have a $500,000 loan. You'll only pay interest on $400,000.
You still repay the same amount every month, but this just means more of your repayment goes towards the remaining loan value and not on interest. So you end up finishing the loan faster.
If I had to credit just one thing with helping me repay my home loan in just 7 years, I'd say it was an offset account. This is a debt-busting secret weapon. You should keep every cent to your name in one of these – we're talking your savings for everything, your emergency cash stash and even your salary. You'll likely save tens of thousands of dollars and shave years off your time in debt.
Nicole Pedersen-McKinnon
Freelance finance journalist
Most borrowers choose 30-year loan terms. And spread out over that time, your monthly repayments are as low as possible.
If you picked a shorter loan term your monthly repayments would be higher, but you'd pay off your loan 5 years earlier, saving thousands in interest.
Let's look at 3 examples. These loans are all for the same amount borrowed, but the loan term changes:
| Loan term | 30 years | 25 years | 20 years |
|---|---|---|---|
| Interest rate | 6.00% | 6.00% | 6.00% |
| Loan amount | $600,000 | $600,000 | $600,000 |
| Monthly repayment | $3,598 | $3,866 | $4,299 |
| Total cost* | $1,295,030 | $1,159,743 | $1,031,611 |
*Total cost here refers to the amount of interest you pay over the life of the loan, plus the principal.
As you can see, a longer loan term means cheaper monthly repayments. But a shorter loan means you pay less interest in the long run, making the whole loan cheaper.
Some lenders charge multiple loan fees that can add up to hundreds of dollars. But other lenders charge basically no fees at all (you still have to pay government fees like a mortgage registration fee).
If 2 loans have identical interest rates and features, the one with fewer fees will be the cheapest home loan.
Easier said than done, of course. But saving a bigger deposit means borrowing less money. And that instantly makes your home loan cheaper.
It saves you money in other ways too:
Let us do the talking - we spoke to heaps of experts, brokers, banks and real humans to put 20+ hours into this guide. Our editors regularly talk to buyers, refinancers, investors and every one in-between to keep this information useful.
Rates obsessed - We track big banks, small banks, credit unions and digital banks because even 1 decimal place could save you big bucks (without getting annoying calls!).
Ready when you need it - Lending rates verified from 180+ products day and night. Whether you've remembered you need to refinance at 3am or live at an auction - our rates are up-to-date.
John is the co-host of the this is money and this is property podcasts (formerly my millennial money and my millennial property). He is Director at SOLVERE Wealth, Director/Buyers Agent at Envisage Property, and is property coach of over 25 years.
Home loan cashback deals can help you refinance to a cheaper interest rate and get a lump sum cash payment. Compare the latest deals and check your eligibility today.
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Hi. I just wanted to know is there any reason why Reduce home loans are no longer on your home loan comparison site ?
Hi Dash,
You can compare rates from Reduce home loans on this page.
I hope this helps.
Kind regards,
Richard
how can I get lown
Hi Hugo,
You can apply for one of the loans on this page by clicking the green button that says ‘Go to site’. Once you arrive at the lender’s site, you should have all the information you need to apply.
Cheers,
Sarah
I have a house that is located in Perth WA and the mortgage is fixed for 2 more years. I would like to change to a lender that is offering less than 3% as the fixed rate of 4.5% can you advise me the safest way to go? mortgage is approximately $160,000 on a 3 year old new home 4 x 2
Hi Rix,
Thanks for getting in touch!
You may refer to our complete guide to refinancing your home loan to know how to get started. You can also refer to our list of refinancing home loans to compare your options. Our table should allow you to compare the features and benefits of each loan provider such as max loan rate, interest and etc. This way it will be easier for you to see which provider fits you best. Banks like HUME, Virgin, and Ubank offer interest rates of less than 3%. If you need further help, a quick guide on how to compare home loans is also stated on the page.
A mortgage broker is the best person to reach out to see your options for refinancing. They can give you a multitude of options according to your situation. In the meantime, to give you an idea of how your monthly repayments will go, you may use our home loan calculator.
As a friendly reminder, carefully review the eligibility criteria of the loan before applying to increase your chances of approval. Read up on the terms and conditions and product disclosure statement and contact the bank should you need any clarifications about the policy.
Hope this helps and feel free to reach out to us again for further assistance.
Best,
Nikki
I have been looking into refinancing my property, but as it’s an acreage (60 ha), no lenders seem to be interested in me.
Hi Ian,
Thank you for getting in touch with Finder.
There are lenders from our rural or hobby farm home loans guide. You can compare your options using our comparison table. When you are ready, press the ‘Go to site’ button to apply. You can also seek professional help from a mortgage broker since you’re having a hard time finding the right bank/lender.
Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.
I hope this helps.
Thank you and have a wonderful day!
Cheers,
Jeni
I have just paid off my house worth approx $800-850k. I am looking at ways besides dying to assist my two children into getting into a property. Can you expand on the family pledge home loan as they both have not got a deposit or another product in which I can assist with them getting into the property market?
Thanks.
Hi Keith,
Thank you for getting in touch with Finder.
You can assist your kids to get a deposit together. For example, the child saves 5% or 10% of a property’s value, and the parent can use the equity in their house to cover the other 10-15%. The child pays back the whole loan (including the amount guaranteed by the parent). Once the parent’s part of the deposit is repaid by the child, the parent/guarantor is usually free from any other debt even if the child can’t repay the rest. But the big risk is if the child can’t repay the loan (including deposit) the parent/guarantor may have to repay it.
Please refer to our guarantor home loans guide for more details and to compare your options.
I hope this helps.
Thank you and have a wonderful day!
Cheers,
Jeni