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Looking after your interest: 7 expert tips to get the best home loan rate in 2023

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We take a look at some of the best ways to lower your interest rate on your next home loan – whether you're a new borrower or refinancer.

Sponsored by Up. Apply for a fixed rate home loan with Up today and lock in a rate as low as 5.90%. Available to new borrowers and refinancers. Terms and conditions apply.

Whether you're thinking about buying your first home, investing in a new property or looking to refinance an existing loan, your interest rate matters.

It's one of the biggest determining factors for how much your repayments will cost. In turn, this also determines how much you'll pay over the lifetime of your loan.

So today, we'll talk you through some top tips for getting the best possible interest rate on your home loan.

πŸ‘‹ Hey there! Up has sponsored this article, so we'll be using their products as an example throughout. Accordingly, we'll be using examples from their products throughout. However, you should always do your own research and choose a mortgage that's right for your particular needs. You should also always read the product disclosure statement (PDS) and target market determination (TMD) before signing up for any home loan product.

1. Look at whether a fixed rate loan is right for your circumstances

Fixed rate loans essentially allow you to "lock in" a specific interest rate on your home loan for a period of time.

This is generally for one to five years – after which the interest rate reverts to a variable one, in line with the wider cash rate.

Fixed rate loans are sometimes seen as more expensive than variable rate loans. This is because even if the cash rate drops, you'll still be locked in to the rate you previously agreed to.

But this isn't necessarily the case. For one thing, if the cash rate goes up, you won't be liable for additional charges.

People tend to opt for a fixed interest rate for a range of reasons. It offers stability around the repayment amount for a set period of time.

Fixing your interest rate isn't always as low as variable rates can potentially be – but the fact it won't rise is great for household budgeting.

It can also provide clearer timelines for when the home will be paid off.

As with anything else in buying a property, a lot of it tends to come down to finding the right lender.

Let's look at Up as an example of a lender with a low annual interest rate.

Currently, Up is offering an annual rate of 6.10% p.a. with Up Home when you opt for a fixed rate for one year.

If you opt to lock your rate for five years, this decreases down to 5.95% p.a.

These rates are among the market's lowest fixed rates.

Checking online for a better home loan

2. Shop around – digital lenders can offer great deals

One of the great benefits of the modern lending market is the sheer variety of lenders that are available. They're now able to cater to borrowers from just about any walk of life.

Digital lenders have seen a particular surge in popularity. They offer fast online applications, useful apps and loans with low fees.

Additionally, they don't tend to charge as many fees, as they don't have physical branches to maintain.

One example of a digital lender is Up.

If you go with a digital lender like Up, you can apply online in minutes and you only need a 10% deposit. You can do it all on your phone.

We touched on Up's low annual interest rates just a moment ago, but they also offer a range of other features, some of which we'll discuss shortly.

3. Get access to the loan features you need

Getting a lower interest rate shouldn't have to mean compromising on loan features.

Make sure you shop around for a lender that strikes the right balance between interest rates and loan features for your needs.

To point to one example, Up's Up Home loan allows you to have up to 50 offset accounts.

In practical terms, this means you're able to save on interest – you can use our offset calculator to get an idea of how much.

You're also able to place money into a variety of different accounts for a range of saving purposes, too.

In addition to these accounts, your transactional/spending account with Up also counts as an offset.

Having access to features like this can allow you to leverage your home loan more effectively, and save more in the long run.
Couple discussing Finances with an advisor

4. Consider refinancing your existing home loan

Refinancing can also be an effective way to lower your interest rate.

As well as saving money, it can also be an opportunity to add extra features to your current loan.

Offset accounts, extra repayments and reduced fees are some of the popular options, all of which can potentially reduce your overall loan costs.

Of course, it's always important to check lender requirements first. For example, you can refinance through Up if you've got at least 10% equity in your current home.

5. Look for low fees

Fees are one of the biggest silent contributors to the cost of a loan.

Now in isolation, they may not seem like very much – but over the lifespan of a loan, they can add thousands of dollars to your overall costs.

So it always pays to take a closer look at what sort of fees are being charged by your lender.

Let's look at Up again. You'll recall that you're able to have up to 50 offset accounts through them.

But what we didn't mention is that unlike many other lenders, they don't actually charge fees for those accounts.

With offset accounts often costing several hundred dollars a year, you can see that there's the immediate potential for significant savings.

Checking details like this can give you a feel for how much you're likely to be paying (or, preferably, not paying) through the lifespan of the loan.
Checking through credit history

6. Have a good credit history in place

It's no secret that there's been an increase in the cost of living over the last few years.

So many lenders are scrutinising prospective borrowers much more closely.

It's a good idea to check your credit score before you start approaching lenders. This will give you an idea of how likely you are to be approved.

Finder also has a guide to how to improve your credit score, too.

Many lenders will also publish suitability criteria on their website, too. As an example, you can see Up's list on their website.

7. Read the fine print – what you see isn't always what you get

One of the things many new borrowers don't realise is that the advertised interest rate isn't always the same as the interest rate you'll actually get.

When you're dealing with some lenders, the rate you get will be determined by a range of factors – the amount you're borrowing, the deposit you have saved, your credit history, your current income and negotiating skills.

The good news is that there are lenders who are upfront about their annual interest rate.

One example is Up. Up deliberately opts for transparency around annual interest rates and fees.

Choosing a lender that's open about their interest rates before you apply can allow you greater clarity around your loan, and potentially significant savings over the lifespan of the loan.

Learn more about fixed rate home loans from Up today

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Name Interest Rate p.a. Comparison Rate p.a. Fees Monthly Payment
Principal & Interest 4Y Fixed10% min. depositOwner-occupierOffset account
Interest Rate
6.40%
Comparison Rate
6.24%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
Go to siteMore Info
Principal & Interest 2Y Fixed10% min. depositOwner-occupierOffset account
Interest Rate
6.45%
Comparison Rate
6.21%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
Go to siteMore Info
Principal & Interest 1Y Fixed10% min. depositOwner-occupierOffset account
Interest Rate
6.50%
Comparison Rate
6.19%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
Go to siteMore Info
Principal & Interest 5Y Fixed10% min. depositOwner-occupierOffset account
Interest Rate
6.45%
Comparison Rate
6.28%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
Go to siteMore Info
Principal & Interest 3Y Fixed10% min. depositOwner-occupierOffset account
Interest Rate
6.40%
Comparison Rate
6.22%
Fees
Application: $0
Ongoing: $0 p.a.
Monthly Payment
Go to siteMore Info
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