Owner-occupier home loans

Mortgages for home buyers are called owner-occupier home loans. Here's how they work.

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Are you looking to buy a home? Then you're an owner-occupier and you're looking for an owner-occupier home loan. On this page, you can compare owner-occupier home loans, get a better idea of how they work and learn how these home loans differ from investment loans.

Compare owner-occupier interest rates

Data indicated here is updated regularly
Name Product Interest Rate (p.a.) Comp. Rate^ Application Fee Ongoing Fees Max LVR Monthly Payment
Suncorp Home Package Plus Fixed
1.89%
2.94%
$0
$0 p.a.
80%
Lock in a low fixed rate loan for two years and get the annual package fee waived in the first year. Available for borrowers with 20% deposits.
UBank UHomeLoan Fixed
1.95%
2.27%
$0
$0 p.a.
80%
A competitive fixed interest rate loan with no ongoing fees. Requires a 20% deposit.
Westpac Fixed Option Home Loan Premier Advantage Package
2.09%
3.5%
$0
$395 p.a.
95%
Up to $3,000 refinance cashback.
Competitive fixed rate home loan. Eligible borrowers refinancing $250,000 or more can get up to $3,000 cashback. Other conditions apply.
St.George Fixed Rate Advantage Package
2.09%
3.46%
$0
$395 p.a.
95%
Lock in a low fixed rate for the first two years. Refinancers borrowing $250,000 or more can get cashbacks between $2,000 and $4,000 depending on their loan to value ratio (Other terms, conditions and exclusions apply
Bank of Melbourne Advantage Package Fixed Home Loan
2.09%
3.46%
$0
$395 p.a.
95%
Competitive fixed rate loan. Refinancers borrowing $250,000 or more can get cashbacks between $2,000 and $4,000 depending on their loan to value ratio (Other terms, conditions and exclusions apply
HSBC Fixed Rate Home Loan
1.88%
2.98%
$0
$0 p.a.
80%
Lock in a competitive fixed rate for 2 years and buy your home with a 20% deposit.
homeloans.com.au Low Rate Home Loan with Offset
2.14%
2.16%
$0
$0 p.a.
60%
A competitive rate with no application or ongoing fee. This loan is not available for construction.
Heritage Bank Fixed Rate Home Loan
2.19%
4.23%
$600
$8 monthly ($96 p.a.)
95%
Get a partial offset account and the option to make interest-only repayments.
Athena Variable Home  Loan
2.19%
2.19%
$0
$0 p.a.
60%
A very low variable rate for home buyers with 40% deposits or equity. This rate takes effect from 30 September for new and existing customers. You can get this rate if you apply today.
homeloans.com.au Low Rate Home Loan with Offset
2.24%
2.26%
$0
$0 p.a.
90%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments. This loan is not available for construction.
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What is the definition of 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. An owner-occupier is different from an investor, who purchases a property to use as an investment to create wealth, not as a place to live.

An owner-occupier home loan is a mortgage where the funds are used by the borrower to purchase a home to live in. This is distinct from an investment loan, which is used by an investor to fund the purchase of an investment property.

The definition of a principal place of residence

The Australian Tax Office considers a property to be your main residence if it meets certain criteria:

  • You live in the home with your family and your belongings are there.
  • You receive mail and are registered on the electoral roll at that address.
  • You have utilities connected to the property.

For taxation purposes, the ATO also considers other factors, such as whether the home has been used to produce income that can be taxed. If your property is your principal place of residence, you can claim an exemption from capital gains tax (CGT) when selling your home.

How are owner-occupier home loans different from other loans?

Owner-occupier home loans are the most common type of home loan. The key difference between an owner-occupier home loan and other home loans (such as investment loans) is the loan's purpose. An owner-occupier home loan must be used for the purpose of purchasing a home to live in.

In terms of mortgage features and loan details, owner-occupier home loans, like other loans, 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.

But these specific details may look different on an owner-occupier loan when compared to an investment loan:

  • The interest rate. Interest rates tend to be lower on owner-occupier home loans than investment loans (if looking at otherwise similar mortgages). This is because lenders regard investments as higher risk than homes.
  • Rate types. Owner-occupier 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 investor and owner-occupier loans can have maximum insured LVRs of up to 95% (meaning you only need a 5% deposit), it is more common on owner-occupier loans. A lender may require a bigger deposit for an investment loan.
  • First home owner grants. If you're an owner-occupier and 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.

Different types of borrowers need different loan structures

While owner-occupier loans 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.

Of course, not every owner-occupier is a first home buyer. An owner-occupier can be selling their home and buying a new one. Or they may be refinancing to a new home loan in order to get a better deal or helpful mortgage features such as an offset account.

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?

Owner-occupiers are treated quite differently from investors for tax purposes.

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.

How do 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 owner-occupier 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.

What does the ATO say about changing from an owner-occupied property to an investment?

When turning your home into an investment property, the ATO recommends you keep records of details related to the property and the income you generate from the property, such as the following:

  • Your costs to purchase the property and the date you signed the contract. This is used to calculate your capital gains when you sell the property.
  • Records of any rental income
  • Records of all expenses incurred in maintaining or repairing the property, which you can claim as deductions.

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Home Loan Offers

Important Information*
Logo for Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)
Westpac Flexi First Option Home Loan - Basic Variable Rate (Owner Occupier, P&I)

Up to $3,000 refinance cashback. A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.

Logo for St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)

Up to $4,000 refinance cashback. With this competitive variable rate loan from St.George, refinancers borrowing $250,000+ can get up $4,000 cashback and borrow up to 90% of the property's value. (Terms, conditions & exclusions apply).

Logo for Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I
Athena Liberate Home Loan - 70% to 80% LVR Owner Occupier, P&I

A competitive variable rate mortgage for owner occupiers $0 application and $0 ongoing fees. This interest rate falls over time as you pay off the loan.

Logo for Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 80% (Owner Occupier, P&I)
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR ≤ 80% (Owner Occupier, P&I)

Get a competitive variable interest rate with no application fee or ongoing fees.

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