How to choose a home loan

how to choose a home loan

Selecting the right home loan is a big decision. Help yourself make the right one by learning how to choose a home loan.

Choosing a home loan can be a difficult task as it can be hard to differentiate between products to decide which ones are suited to your needs. Below are some of the most common types of home loans:


  • Variable: A variable home loan is a loan where the interest rate is not locked in. With a variable rate home loan, your interest rate fluctuates in line with the official cash rate set by the Reserve Bank of Australia (RBA). Variable rate home loans are good for those who want to take advantage of potential low interest rates and generally come with more features. However, you must be prepared that the interest rate will move up and down. In this regard they are less secure than a fixed home loan.
  • Fixed: With a fixed rate home loan, your interest rate is locked in for a fixed period - usually between 1 - 5 years. Fixed home loans allow for better planning as you can work out your repayments upfront, and have the peace of mind knowing that your interest rate will remain unchanged during the fixed period. However, these loans tend to have less flexibility and you may miss out on a potentially lower interest rate. With some fixed loans, you may also not be able to make additional repayments.
  • Split: As the name suggests, a split home loan is one that is split between variable and fixed rates. Part of your home loan is variable and part is fixed. This potentially allows you to get the some of the benefit of both loans and have the security of a fixed rate, while still being able to take advantage of potential rate changes with a variable rate.

What is a comparison rate?

Comparison rates measure the interest rate including regular fees and establishment costs over the 25 year life of a $150,000 loan. Comparison rates are a handy indicator to help people compare home loans more easily.

Use our home loan checklist to keep track of the loans you compare

Documentation types

Low doc: Low doc home loans are appropriate for those who have difficulty showing documentation of their employment and income, such as those who are self-employed. Low doc home loans are flexible loans designed for those who are self-employed because you don’t have to show evidence of savings or income. This type of loan may also be appropriate for someone who is a new Australian or a full time investor who can’t prove their income.

Full doc: Full doc home loans require you to meet the normal documentation standards required to complete your home loan application. This means evidence of your income, debts and assets.

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Rates last updated June 17th, 2019
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
$0 p.a.
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees. UBank will cut its variable rates for new and existing customers on June 28, making this rate even lower.
$10 monthly ($120 p.a.)
A low fixed rate loan that lets you borrow up to 90% of your property's value.
$0 p.a.
A one year fixed rate offer with no ongoing bank fees.
$0 p.a.
A simple mortgage with no application or ongoing fees that has extra repayments plus split and redraw options. Requires a 30% deposit.
$395 p.a.
Loans over $150000 get a discount off an already low fixed rate. Available for NSW, QLD and ACT residents only.

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How to compare home loans

  • Rates. The lower the interest rate, the lower your loan repayments will be. It's as simple as that. So be sure to compare rates carefully.
  • Fees. Mortgage fees can add to your costs as well. Compare the fees of each loan you're considering. This includes application, legal, settlement, exit and ongoing fees.
  • Features. Features like offset accounts, redraw and extra repayment options can make a mortgage significantly more useful because they give you more flexibility and control over your repayments.
  • Repayment type. You will need to choose between fixed or variable rates, and interest only or principal and interest repayments.
  • Eligibility. Not everyone will be eligible for every type of loan and certain loans may be more suited to people based on their borrowing situation. Some home loans may be restricted based on the square meterage of the property, your income, employment status (e.g. those who are self-employed should consider low doc loans), how much you need to borrow, if you’re an Australian resident or not, and your age. Compare home loans based on your eligibility for them.

Don’t let the stress of finding the right home loan prevent you from purchasing your own home. Choosing a home loan no longer needs to be difficult now that you know what to look out for and what to compare. Start your own home loan comparison today to find the right one for you, or check out one of’s home loan calculators to get a better understanding of your borrowing capacity.

If you're still confused and need more help you also have the option of speaking to a mortgage broker. Brokers are mortgage professionals who can help you choose a mortgage. Their services are free because they receive a commission from the lender.

You can get in touch with a broker using the form below.

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Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2018 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

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UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 3.59% p.a. and a 3.59% p.a. comparison rate.

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