Owner-occupier home loans rates from 5.69%

How we calculate Home Loan Finder Scores

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What different scores mean

9+

Excellent

These home loans offer low costs, coupled with a host of features, giving the best overall value.

7+

Great

These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.

5+

Standard

Usually the home loans would offer above average rates. They may still include some competitive features.

0+

Basic

Higher costs and/or fewer features.

What is an owner occupier?

An owner-occupier is someone who lives in a residential property as their principal place of residence. That is, you live in your own home. They are different from an investor, who purchases a property to use as an investment to create wealth, not as a place to live.

How are owner-occupier loans different from other loans?

The key difference between an owner-occupier home loan and other home loans (such as investment loans) is the loan's purpose. For an owner occupier home loan you must be planning to live in the home you're buying, not renting it out.

In terms of mortgage features and loan details, owner occupier home loans are like other loans in that they have an interest rate and comparison rate, rate types, minimum and maximum loan amounts, various loan fees and maximum (and maximum insured) loan to value ratios.

What to look for in an owner occupier home loan vs an investment loan

• The interest rate. Interest rates tend to be lower than investment loans (if looking at otherwise similar mortgages). This is because lenders regard investments as higher risk than homes.
• Rate types. OO loans can be either fixed or variable. This is no different to investment loans. You can also choose to split your rate into fixed and variable portions.
• Loan to value ratio. Loan to value ratio (LVR) refers to the amount you can borrow in relation to the value of the property. The higher the LVR, the more you can borrow and the smaller your deposit needs to be. While both types of loans can have maximum insured LVRs of up to 95% (meaning you only need a 5% deposit), it is more common on OO loans. A lender may require a bigger deposit for an investment loan.
• First home owner grants. If you've never owned property before, you may qualify for various government grants and stamp duty concessions or exemptions. This is something you can't get if you're buying an investment. Keep in mind that grants and concessions differ by state and territory, so you will need to check your local policies.
• Repayment type. Owner-occupier loans can have either principal and interest or interest only repayments, just like investment loans. Interest only loans are particularly popular with investors as a way of minimising non-tax-deductible investment costs. But owner-occupiers may use them too if they want to minimise their repayments in the short term.
• Features. Owner-occupier loans may come with features like a redraw facility or an offset account. These features are available on investment loans too.

Our expert says: Different borrowers need different loan structures

"While owner occupier home loans can look similar to investment loans and other products, the specific needs of the borrower may differ.

For example, an investor may care more about getting a loan with interest only repayments while an owner-occupier may care about getting a lower interest rate. A first home buyer with a small deposit saved may look for a loan with a high LVR and have their parents act as a guarantor to help them qualify for the home loan.

For borrowers who want to build their new home before they live in it, they too will need a different structure. A construction loan can provide the finance in stages depending on the stage of construction."

Rebecca Pike

Editor, Money

Can I change from an owner occupied property to an investment property?

If you convert your home to an investment property, you will need to switch your home loan to a new investment loan. Depending on your lender's policies, you can either apply for a new investment loan or make a variation to your current loan and convert it to an investment loan. Your lender may have a variation form to complete or you may have to call and speak to a lending specialist.

You can also refinance to a new loan with a new lender if you think there's a better deal available. Just be sure to compare investment loan rates and look at exit and switching fees.

Speaking to a mortgage broker is also a good idea, as they can present you with multiple options and help you determine the optimal way to structure your current or new mortgages.

Frequently asked questions about owner occupier home loans

• Why do owner-occupiers get interest only home loans?

  Interest only home loans make sense for some property investors because they can claim interest costs on tax (but not principal). Owner-occupiers can't do this and are generally better off with principal and interest repayments.

  This is because repaying your loan principal means you are actually repaying your debt. Borrowers who opt for interest only repayments initially end up paying more interest in the end.

  Why would owner-occupier borrowers choose interest only then? A major reason is to stay afloat when you're struggling with mortgage repayments. If you've just lost your job or your income is reduced for any reason, switching temporarily to interest only repayments can help you keep your mortgage going without missing repayments.

  It's an option that can help you stay on top of your mortgage in the short term, but it will cost you more in the long run.

• Can an owner-occupier claim tax deductions from their home loan costs?

  When you sell your own home, you don't need to pay capital gains tax (CGT). This is a tax charged on investors who sell a property at a profit. Owner-occupiers can claim the main residence exemption mentioned above.

  Investors can get a 50% discount on capital gains tax if they have owned the property for more than 12 months.

  But investors do have the advantage of being able to claim tax deductions on expenses related to owning and maintaining an investment property. This includes the interest charged on a home loan.

  Owner-occupiers can't claim these maintenance or interest costs back on tax. However, if you run a home office or work from home, there are some items and expenses owner occupiers can claim.

• What's the best owner occupier home loan?

  There's not really a 'best' home loan. Although the home loan with the lowest rate might be the best loan for some people, it won't necessarily have the features and flexibility that other borrowers require. For example, many borrowers want to know they can maximise their savings with an offset account.

  It's best to figure out what you want from your version of a 'best home loan' and then compare loans across the market to get the lowest cost home loan with the right features.

What is Finder Score?

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.

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Written by

Rebecca Pike

Editor, Money

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Rebecca Pike is Finder’s money editor, with over 7 years of experience in mortgages and personal finance. A frequent TV and radio commentator, she frequently appears on Sunrise and 7News, Today and 9News, as well as Sky News, Channel 10 and across radio and print. Rebecca previously served as Editor of Mortgage Professional Australia. She has a Master’s degree in Journalism as well as ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products, which comply with ASIC guidelines. See full bio

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Rebecca has written 283 Finder guides across topics including:

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