You wouldn’t buy the first house you saw on a lot without going inside, researching the suburb and looking at other houses in the area. The same is true about your home loan. 

Why should you compare home loans?

In Australia, well over half of home borrowers are with a Big Four Bank. There’s nothing wrong with choosing a Big Four Bank, but the issue is that some Aussies don’t make a choice at all. They stick with the bank they’ve been with their whole life. Bank loyalty may mean that you’re missing out on a more competitive option. 

Whether you’re buying your first home, or considering refinancing, there are many reasons to compare mortgage options. 

Find the most competitive interest rates: Lower interest rates will mean lower mortgage repayments. The rate offered by the bank you’ve been with since you were a kid may not be the most competitive one you could get. Plus, if you’re considering refinancing, doing your research on lower rate lenders can be a helpful negotiation tactic. While there is more to a loan than just it’s interest rate, it’s still important to compare your options. 

Avoid fees and charges: There are a range of fees and charges lenders can sting you with for the privilege of having a mortgage with them. However, some lenders charge much less, or don’t charge some fees at all. Comparing your loan options could save you a lot in fees over the life of your loan. 

Enjoy mortgage flexibility and features: Not every loan will let you make extra repayments, offer an offset account, or a redraw facility. If these are important to you, it pays to shop around. 

There are thousands of home loans available on the Australian market. It can be difficult to work out which home loan is best for you. By comparing your options, you can look at different home loans side by side and get a better idea of the value they offer before making a decision. 

 

 

 

Compare popular home loans

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Product
Advertised Rate
Comparison Rate*
Company
Monthly Repayment
Features
Real Time Rating™
Go to site

3.27%

Variable

3.28%

HSBC

$733

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

4.02

/ 5
More details

2.99%

Fixed - 3 years

3.45%

UBank

$711

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.49

/ 5
More details

3.09%

Variable

3.05%

Athena Home Loans

$718

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.21

/ 5
More details

3.59%

Variable

3.24%

Athena Home Loans

$449

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.18

/ 5
More details

3.49%

Variable

3.49%

UBank

$750

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.73

/ 5
More details

3.59%

Variable

3.49%

Athena Home Loans

$449

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.18

/ 5
More details

3.49%

Variable

3.45%

Athena Home Loans

$750

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.61

/ 5
More details

3.49%

Fixed - 5 years

3.85%

UBank

$750

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.12

/ 5
More details

3.19%

Fixed - 5 years

3.44%

UBank

$726

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.58

/ 5
More details

2.88%

Variable

2.90%

loans.com.au

$702

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.35

/ 5
More details

3.39%

Variable

3.39%

Hume Bank

$742

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

4.01

/ 5
More details

3.19%

Variable

3.22%

Mortgage House

$726

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

4.31

/ 5
More details

3.38%

Variable

3.52%

Virgin Money

$741

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.95

/ 5
More details

3.32%

Variable

3.37%

Heritage Bank

$737

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

3.85

/ 5
More details

3.15%

Variable

3.17%

State Custodians

$723

Redraw facility
Offset Account
Borrow up to 80%
Extra Repayments
Interest Only
Owner Occupied

4.49

/ 5
More details

3.36%

Variable

3.39%

IMB Bank

$740

Redraw facility
Offset Account
Borrow up to 90%
Extra Repayments
Interest Only
Owner Occupied

3.83

/ 5
More details

3.19%

Fixed - 3 years

3.74%

Heritage Bank

$726

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

3.81

/ 5
More details

3.79%

Variable

3.79%

Hume Bank

$774

Redraw facility
Offset Account
Borrow up to 85%
Extra Repayments
Interest Only
Owner Occupied

3.35

/ 5
More details

3.49%

Fixed - 1 year

3.81%

Heritage Bank

$750

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

3.57

/ 5
More details

3.37%

Variable

3.42%

SCU

$741

Redraw facility
Offset Account
Borrow up to 95%
Extra Repayments
Interest Only
Owner Occupied

3.78

/ 5
More details

Learn more about home loans

How to compare home loans

The easiest way to compare home loans in Australia is to use comparison tools. These include comparison tables, calculators, and comparison rates. 

Comparison tables are a helpful way to compare apples with apples. They allow you to view a range of loans next to each other, and see their rates, monthly repayment amounts, fees and features. You filter down your options by entering your borrowing amount, loan value and other factors. RateCity’s comparison tables also offer Real Time Ratings - personalised home loan rankings calculated for you out of five. 

Home loan calculators then allow you to see if you can afford one or more loan options you’ve found. This is done by showing you your potential monthly/fortnightly/weekly repayment amounts and the total cost over the life of your loan. This is helpful for budgeting, and seeing which loans will cost more over time due to interest or fees. Home loan calculators use the same borrower information mentioned above. 

Comparison rates allow you to more accurately know the true cost of a home loan and compare your options. Home loan comparison rates are calculated on a loan of $150,000 over 25 years. Comparison rates were made compulsory in response to lenders advertising very low rates on loans that would then charge high upfront and ongoing fees.

TIP: Always check out the Key Facts Sheet. These are provided by lenders and give you greater detail on the loan you may be interested in. They highlight information such as the interest rate and total amount to pay over the life of the loan. 

Example: finding a low rate investment loan

Louise is a first-time investor who wants the lowest current home loan interest rate on the market. She has a deposit of $100,000 and wants a loan of $500,000. By selecting a loan term of 30 years using RateCity’s home loan comparison table, she discovers hundreds of potential loans.

Louise previously asked her bank (one of the Big Four Banks) about the cost of a home loan. During her home loan comparison, Louise discovers there are at least five lenders on RateCity that can shave up to $80 a month off what her bank offered. Over 30 years, that adds up to tens of thousands in savings.

Louise wants to know more about one of the loans on offer, due to its low rate and low fees. She clicks the ‘View Now’ button and is directed to the lender’s website, where she can find more information about their home loan offers, as well as the lender's contact details.

Where to start when comparing home loans

Begin your home loan comparison by asking yourself the following questions:

  • How much do you want to borrow? The more you choose to borrow for your home loan, the higher the cost of repayments.
  • How much deposit can you afford? Home loans with lower interest rates are more likely to require higher upfront security deposits. If your  deposit is less than 20 per cent of the property's value, you may be required to pay Lender’s Mortgage Insurance (LMI).
  • How long do you want your home loan term to be? Home loans typically have 25-30 year terms, but can be longer. Keep in mind, the longer your loan term, the lower your monthly repayments, but more interest you’ll be charged in total. 
  • Are you buying as an owner-occupier or as an investor? Investors are often charged higher home loan interest rates than owner-occupiers.
  • What features do you want in a mortgage? The best home loan isn't always the one with the lower rate. Rather, it’s the one you're happy with. This may mean it offers features such as the ability to make extra repayments, an offset account, or a redraw facility. 

Once you've worked out some of your preferences, you can start to narrow down your list of potential home loan options for your mortgage comparison.

Will my credit history affect getting a home loan?

Your credit score will impact the home loans you’re realistically able to compare. Banks grade your eligibility for financial products on a level of risk you may default on your payments. Australians with stellar credit scores will be more likely to qualify for lower rates. This is because these borrowers appear less ‘risky’. 

If your credit score is less than average, you won't necessarily be unable to get a home loan. You just may only be eligible for specific loans, and may be charged a higher interest rate. For more information on credit scores, including how to improve yours, please check out our credit score hub. 

What else should you consider when choosing a home loan?

On top of the basics, like how much you want to borrow, there are other things to think about when choosing a home loan. 

Stamp duty

Also known as transfer duty, stamp duty (in the context of mortgages) is a government imposed tax on land transfers and property sales that must be paid by the buyer. It is one of the biggest upfront costs of purchasing a home. 

The amount varies state-by-state and must be paid within 30 days of settlement of the property. For would-be-buyers, you must factor in the cost of stamp duty while saving for a home loan deposit. For example, on a $800,000 home purchased in NSW, you’d have to pay over $30,000 in stamp duty. 

While all land transfers and property sales incur stamp duty, some buyers may be exempt from paying it, or qualify for concessions. This can vary state-by-state. Typically, stamp duty concessions or exemptions apply on a tiered basis - e.g. exemptions for property prices under a certain amount, concessions for a higher amount. First home buyers can also be exempt from paying stamp duty in some states. For more information on stamp duty concessions and exemptions, visit your state government’s website. 

Use RateCity’s stamp duty calculator to see how much you may have to pay. 

Are you a first home buyer?

Getting a foot on the property ladder can be hard for first home buyers. This is why some state governments offer incentives to help them, such as schemes and grants. Some schemes see first home buyers exempt from paying stamp duty, as mentioned above. This means their total upfront costs are reduced and purchasing a property becomes more attainable. 

Your state may also offer a First Home Owner Grant. This is usually a monetary amount given towards the purchase price. The amount a state can offer can depend on the purchase price, with higher grant amounts going towards buyers purchasing property under $750,000, for example. 

If you’re a first time home buyer, it’s worth looking into what you may qualify for when purchasing your property. Check out your state government’s website for more information. 

What is the cash rate and will it change soon?

Every first Tuesday of the month (except January), the Reserve Bank of Australia (RBA) meet to set the cash rate. The cash rate is the rate that banks pay or charge to borrow funds from other banks in the overnight market. It’s also used as a benchmark for home loan rates and savings account rates. 

The RBA decides whether to cut, hike or keep rates the same based on a range of factors, including household debt levels, inflation, Australia’s economic growth, unemployment rates, the housing market, and many more. Before choosing your home loan, it’s worth researching how the cash rate is tipped to move, as it may impact your home loan rate. 

Variable home loan rates are subject to change as the cash rate moves. If the RBA is tipped to cut the cash rate one or more times in the upcoming months, it may be worth considering a variable home loan rate. Your mortgage repayments and interest rate will decrease as the cash rate does (if your lender passes on the cut). 

However, if the cash rate is tipped to rise, your variable home loan rate would rise with it. This is where fixing your home loan rate can come in handy. Your rate and repayment amounts won’t change over the fixed period - usually up to five years. You can never predict the bottom of the market for fixing, so keeping an eye on potential cash rate movements is the next best thing. 

Not sure where to start? Try reading the latest financial news on RateCity, following financial experts on social media, and checking out some personal finance books. 

Frequently asked questions

How do you determine which home loan rates/products I’m shown?

When you check your home loan rate, you’ll supply some basic information about your current loan, including:

  • the amount owing on your mortgage
  • the value of your property
  • your current interest rate
  • name of existing lender
  • property address

We’ll compare this information to the home loan options in the RateCity database, and show you which home loan products you may be eligible to apply for.

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

What is a variable home loan?

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

How do I refinance my home loan?

Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.

Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.

The fine print – what are the eligibility criteria?

This competition is only available to Australian residents who are over 18 and check their home loan interest rate at RateCity. However, you are not required to refinance your home loan or apply for any financial products.

You can still enter if you don’t have a home loan yet – enter how much you plan to borrow and the details of the property you’re considering, and we’ll compare mortgage offers that may suit your needs and estimate how much you could save compared to a loan with an average interest rate. 

You couldn’t beat my current rate – how do I claim my reward?

If we can’t beat your current home loan rate, you can claim your $100 gift card by confirming your home loan details with us.*

To do this, on your results page you’ll need to securely upload a bank statement or similar home loan document that can be used to confirm the home loan details you provided. We’ll keep your information private and confidential and only use your document to confirm your entry.

What is the difference between fixed, variable and split rates?

Fixed rate

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Variable rate

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

Split rates home loans

A split loan lets you fix a portion of your loan, and leave the remainder on a variable rate so you get a bet each way on fixed and variable rates. A split loan is a good option for someone who wants the peace of mind that regular repayments can provide but still wants to retain some of the additional features variable loans typically provide such as an offset account. Of course, with most things in life, split loans are still a trade-off. If the variable rate goes down, for example, the lower interest rates will only apply to the section that you didn’t fix.

Does the Rate Guarantee apply to discounted interest rate offers, such as honeymoon rates?

No. Temporary discounts to home loan interest rates will expire after a limited time, so they aren’t valid for comparing home loans as part of the Rate Guarantee.

However, if your home loan has been discounted from the lender’s standard rate on a permanent basis, you can check if we can find an even lower rate that could apply to you.

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

Home Loans Frequently Asked Questions

What's wrong with traditional ratings systems?

They’re impersonal 

Most comparison sites give you information about rates, fees and features, but expect you’ll pay more with a low advertised rate and $400 ongoing fee or a slightly higher rate and no ongoing fee. The answer is different for each borrower and depends on a number of variables, in particular how big your loan is. Comparisons are either done based on just today or projected over a full 25 or 30 year loan. That’s not how people borrow these days. While you may take a 30 year loan, most borrowers will either upgrade their house or switch their home loan within the first five years. 

You’re also expected to know exactly which features you want. This is fine for the experienced borrower, but most people know some flexibility is a good thing, but don’t know exactly which features offer more flexibility than others. 

What is the flexibility score?

Today’s home loans often try to lure borrowers with a range of flexible features, including offset accounts, redraw facilities, repayment frequency options, repayment holidays, split loan options and portability. Real Time Ratings™ weights each of these features based on popularity and gives loans a ‘flexibility score’ based on how much they cater to borrowers’ needs over time. The aim is to give a higher score to loans which give borrowers more features and options.

They’re not always timely

In today’s competitive home loan market, lenders are releasing new offers almost daily. These offers are often some of the most attractive deals in the market, but won’t get rated by traditional ratings systems for up to a year. 

The assumptions are out of date 

The comparison rate is based on a loan size of $150,000 and a loan term of 25 years. However, the typical loan size is much higher than that. Million dollar loans are becoming increasingly common, especially if you live in metropolitan parts of Australia, like Sydney and Melbourne. It’s also uncommon for borrowers to hold a loan for 25 years. The typical shelf life for a home loan is a few years. 

The other problem is because it’s a percentage, the difference between 3.9 or 3.7 per cent on a $500,000 doesn’t sound like much, but equals around $683 a year. Real Time Ratings™ not only looks at the difference in the monthly repayments, but it will work out the actual cost difference once fees are taken into consideration. 

How can I get a home loan with bad credit?

If you want to get a home loan with bad credit, you need to convince a lender that your problems are behind you and that you will, indeed, be able to repay a mortgage.

One step you might want to take is to visit a mortgage broker who specialises in bad credit home loans (also known as ‘non-conforming home loans’ or ‘sub-prime home loans’). An experienced broker will know which lenders to approach, and how to plead your case with each of them.

Two points to bear in mind are:

  • Many home loan lenders don’t provide bad credit mortgages
  • Each lender has its own policies, and therefore favours different things

If you’d prefer to directly approach the lender yourself, you’re more likely to find success with smaller non-bank lenders that specialise in bad credit home loans (as opposed to bigger banks that prefer ‘vanilla’ mortgages). That’s because these smaller lenders are more likely to treat you as a unique individual rather than judge you according to a one-size-fits-all policy.

Lenders try to minimise their risk, so if you want to get a home loan with bad credit, you need to do everything you can to convince lenders that you’re safer than your credit history might suggest. If possible, provide paperwork that shows:

  • You have a secure job
  • You have a steady income
  • You’ve been reducing your debts
  • You’ve been increasing your savings

Switch & Save help desk

How do you calculate how much you could save with a lower rate?

To work out how much you could save, we run the home loan details you’ve provided through our database, and search for similar home loan options that we think would be suitable for you.

We then calculate the costs of these loan options over 15 years (to keep our calculations consistent) and compare them to the cost calculations for your current home loan.

How can I calculate interest on my home loan?

You can calculate the total interest you will pay over the life of your loan by using a mortgage calculator. The calculator will estimate your repayments based on the amount you want to borrow, the interest rate, the length of your loan, whether you are an owner-occupier or an investor and whether you plan to pay ‘principal and interest’ or ‘interest-only’.

If you are buying a new home, the calculator will also help you work out how much you’ll need to pay in stamp duty and other related costs.

What is a bad credit home loan?

A bad credit home loan is a mortgage for people with a low credit score. Lenders regard bad credit borrowers as riskier than ‘vanilla’ borrowers, so they tend to charge higher interest rates for bad credit home loans.

If you want a bad credit home loan, you’re more likely to get approved by a small non-bank lender than by a big four bank or another mainstream lender.

What is principal and interest'?

‘Principal and interest’ loans are the most common type of home loans on the market. The principal part of the loan is the initial sum lent to the customer and the interest is the money paid on top of this, at the agreed interest rate, until the end of the loan.

By reducing the principal amount, the total of interest charged will also become smaller until eventually the debt is paid off in full.

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

Are bad credit home loans dangerous?

Bad credit home loans can be dangerous if the borrower signs up for a loan they’ll struggle to repay. This might occur if the borrower takes out a mortgage at the limit of their financial capacity, especially if they have some combination of a low income, an insecure job and poor savings habits.

Bad credit home loans can also be dangerous if the borrower buys a home in a stagnant or falling market – because if the home has to be sold, they might be left with ‘negative equity’ (where the home is worth less than the mortgage).

That said, bad credit home loans can work out well if the borrower is able to repay the mortgage – for example, if they borrow conservatively, have a decent income, a secure job and good savings habits. Another good sign is if the borrower buys a property in a market that is likely to rise over the long term.