Why should you look for the best home loan rates?

While there is no one-size-fits-all top home loan, working out which home loans most closely match your needs can help you to find the best mortgage for you.

With the variety of Australian home loan offers available, there will likely be several mortgages that could be right for you. Once you know what to compare and what you're looking for, you should be able to identify some good options, leading you to your best mortgage.

RateCity's comparison tool allows you to filter home loans by many different features, giving you a better idea of which mortgages could offer the best home loan rates, features and benefits to suit your needs.

Find and compare Australia's top home loans

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1.89%

Fixed - 2 years

2.94%

Suncorp Bank

$1.3k

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

3.57

/ 5
More details

2.59%

Fixed - 5 years

2.53%

UBank

$1.4k

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

2.47

/ 5
More details

2.29%

Fixed - 3 years

2.74%

UBank

$1.3k

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

2.05

/ 5
More details

2.54%

Variable

2.54%

Athena Home Loans

$1.4k

Redraw facility
Offset Account
Borrow up to 60%
Extra Repayments
Interest Only
Owner Occupied

3.13

/ 5
More details

2.05%

Fixed - 2 years

2.65%

Adelaide Bank

$1.3k

Redraw facility
Offset Account
Borrow up to 94.9999%
Extra Repayments
Interest Only
Owner Occupied

2.32

/ 5
More details

2.29%

Fixed - 5 years

2.73%

Virgin Money

$1.3k

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

3.90

/ 5
More details

Who offers the best home loan?

Finding the best home loan isn’t as easy as it sounds. The best home loan for one person may not be the best home loan for the next person. It’s important to look for the best home loan for your personal financial situation, where you can fulfil the eligibility criteria and also comfortably afford the repayments. 

For example, the big four banks offer home loans with features and benefits that could suit a variety of different borrowers, including branch access and other bundled financial services. Smaller online-only non-bank lenders may offer home loans with lower interest rates, resulting in more affordable mortgage repayments, but these lenders may only operate online or over the phone, and only offer home loans. 

How do I decide which is the best mortgage for me?

Want to know how to get a home mortgage? There are several questions to consider when weighing up home loan options to find the right one for you:

  • How long will I need to take out a home loan for?
  • What are the best home loan rates? Are they fixed or variable rates?
  • What will my mortgage repayments be? Can I make additional repayments?
  • Are there any added fees to include in my calculations?
  • Can I sustain a good lifestyle while paying off this mortgage?

Remember that while advice on the best home loans from friends and family might be useful, it shouldn't alone be the sole basis of your home loan decision. Everyone is different, which is why making your mortgage comparison to find the best home loan rates for your finances is so important.

Top mortgage factors to consider

When looking for the most suitable mortgage for your needs, here are a few of the factors to keep in mind:

Fixed or variable interest rate?

Before you start looking for the best mortgage interest rates, decide whether you're interested in a variable or fixed interest rate. Keep in mind that the best home loan rates for your finances may not necessarily be the lowest rates available.

Variable rate home loans

Most mortgages are based on a variable interest rate that will fluctuate over time, often in line with the Reserve Bank of Australia cash rate. If rates rise, so will your mortgage repayments, but if your bank passes on a rate cut, you could find yourself paying less interest on your home loan.

Fixed rate home loans

Some mortgages allow you to lock in a low fixed interest rate for a period of time, keeping your budgeting consistent to help you plan your future repayments. While this could see you miss out on some savings if mortgage rates were to fall, you'd also be protected from higher repayments if home loan rates were to rise.

What is the average interest rate for a home loan?

When you're comparing home loan interest rates, finding a baseline average can help you better understand which home loans charge low or high interest.

Because mortgage rates change regularly, vary widely based on loan type, and aren't always available to all types of borrowers (e.g. low owner-occupier home loan rates aren't available to investors), the average of all home loan interest rates in the market rarely stays the same for very long.

The Reserve Bank of Australia (RBA) keeps track of average home loan interest rates in Australia. This can help you get a better idea of what to expect when you’re comparing different home loan offers.

Remember that there’s more to a home loan than just its interest rate. Even if a home loan has a higher than average interest rate, if it also offers features and benefits that suit your needs, it may still be a better choice than some home loans with cheaper interest rates. Compare different home loan options to learn more before you apply.

Finding the lowest interest rates

Once you've decided on which type of loan you would like, it's time to start comparing home loan interest rates to find the lowest mortgage rates in Australia. It's important to keep in mind that the lowest current mortgage rates aren't necessarily the best mortgage rates for all borrowers, as they may require borrowers to fulfil specific terms and conditions.

How large is your home loan deposit?

Many of the lowest rates on the market are available only to borrowers who can afford a large deposit, often 20% or more of the property value. This is because the higher the deposit a borrower can afford, the less of a risk they represent to a lender.

Some home loans are available with smaller minimum deposits, such as 10% or even 5% of the property value, though these loans will likely require you to pay a higher interest rate, and as well as Lender's Mortgage Insurance (LMI).

Are you an owner-occupier or an investor?

The interest rate on your home loan may also partially depend on whether you're planning to live in the property you buy as an owner-occupier, or rent it out as an investor.

Due to the higher average risk of payment defaults, as well as government regulations, lenders generally charge higher interest rates for investor home loans than they do for owner occupier home loans.

Customising your home loan search using RateCity's comparison tools can help you to compare mortgages that more closely match your circumstances, and determine which are the best home loan rates for your unique household.

Looking at home loan fees

Another consideration when looking for the best home loans in Australia is finding out what fees will be charged.

There are many different types of fees to be aware of when looking for the cheapest home loan for your needs. These can include:

  • Establishment fees
  • Settlement fees
  • Fees for using features such as an offset account of redraw facility, and;
  • Fees associated with making extra repayments.

Unfortunately, this doesn't cover the whole range of home loan fees out there that can be charged by different lenders, so when looking for the best mortgage for your needs, it's essential to thoroughly research potential loan options and enquire about what fees will be charged.

It is possible to find cheap home loans that charge relatively little to no fees, so don't feel obliged to pay thousands in unnecessary costs.

You can also often negotiate with a lender when refinancing or taking out a new loan to waive some of the upfront costs - if a lender wants your business, they may be willing to offer a discount to keep you happy.

For this reason, the best home loan rates for your needs may not necessarily be exactly what's advertised online, but may be arranged by contacting a lender and/or a mortgage broker.

How do I find the top home loans on RateCity?

Comparing home loans can seem challenging, but there are ways to make it easier. Using a comparison website like RateCity, you can compare a variety of home loan options side by side, and see which home loan interest rates, fees, features and benefits may best suit your needs. 

For a faster and simpler way to compare the top home loan on RateCity, you can start be checking their Real Time Ratings™. These star ratings are based on a combination of a loan’s overall cost (including interest and fees) and the flexibility offered by its features and other benefits. Real Time Ratings™ are updated every day, to reflect changes to interest rates and features from banks and lenders. 

To narrow down your search to just the top home loans in a category, you can check out the RateCity Home Loan Leaderboards. These collect the top-rated home loans on RateCity each day, and are updated when there are changes to the Real Time Ratings™. 

If a mortgage offer stays on the Home Loan Leaderboards for six months or more, to becomes eligible for the coveted RateCity Gold Award. If you see this gold badge on a home loan offer, you can be confident it’s one of the top-rated products in its category on RateCity.

Are the best home loans from banks or non-bank mortgage lenders?

One of the simplest ways to apply for a home loan is to visit your current bank, and find out what they can offer their customers. Some advantage of getting a home loan from your bank is that they already know your details, which can help simplify the application process, and you should already have a good idea of what level of customer service they provide.  

However, your bank may not be the best bank for you to get a home loan from. They may charge higher interest rates or fees than you could comfortably afford, or may not offer the mortgage features that you’re interested in. Some of the best bank home loans may come from other banks, who offer more competitive home loan interest rates, lower fees, or features and benefits that better suit your financial situation. 

It’s often a good idea to compare home loan options from a variety of different banks and non-bank lenders before you apply for a mortgage. Non-bank mortgage lenders can include credit unions, building societies and mutual banks. Some of these lenders offer low interest rates and low fees on their home loans in order to complete with the bigger banks. 

There are also online-only lenders and fintechs, which let you manage you money and your home loan from a smartphone app. Online-only lenders may be able to offer even lower rates and fees, as they don’t have to manage the ongoing expenses a network of offices or bank branches. Of course, this also means you wouldn’t have the option of meeting a banker in person at a branch, so consider whether this is important to you before you apply. 

Frequently asked questions

What is the best interest rate for a mortgage?

The fastest way to find out what the lowest interest rates on the market are is to use a comparison website.

While a low interest rate is highly preferable, it is not the only factor that will determine whether a particular loan is right for you.

Loans with low interest rates can often include hidden catches, such as high fees or a period of low rates which jumps up after the introductory period has ended.

To work out the best value for money, have a look at a loan’s comparison rate and read the fine print to get across all the fees and charges that you could be theoretically charged over the life of the loan.

I can't pick a loan. Should I apply to multiple lenders?

Applying for home loans with multiple lenders at once can affect your credit history, as multiple loan applications in short succession can make you look like a risky borrower. Comparing home loans from different lenders, assessing their features and benefits, and making one application to a preferred lender may help to improve your chances of success

How can I negotiate a better home loan rate?

Negotiating with your bank can seem like a daunting task but if you have been a loyal customer with plenty of equity built up then you hold more power than you think. It’s highly likely your current lender won’t want to let your business go without a fight so if you do your research and find out what other banks are offering new customers you might be able to negotiate a reduction in interest rate, or a reduction in fees with your existing lender.

Which mortgage is the best for me?

The best mortgage to suit your needs will vary depending on your individual circumstances. If you want to be mortgage free as soon as possible, consider taking out a mortgage with a shorter term, such as 25 years as opposed to 30 years, and make the highest possible mortgage repayments. You might also want to consider a loan with an offset facility to help reduce costs. Investors, on the other hand, might have different objectives so the choice of loan will differ.

Whether you decide on a fixed or variable interest rate will depend on your own preference for stability in repayment amounts, and flexibility when it comes to features.

If you do not have a deposit or will not be in a financial position to make large repayments right away you may wish to consider asking a parent to be a guarantor or looking at interest only loans. Again, which one of these options suits you best is reliant on many factors and you should seek professional advice if you are unsure which mortgage will suit you best.

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 are the responsibilities of a mortgage broker?

Mortgage brokers act as the go-between for borrowers looking for a home loan and the lenders offering the loan. They offer personalised advice to help borrowers choose the right home loan for their needs.

In Australia, mortgage brokers are required by law to carry an Australian Credit License (ACL) if they offer credit assistance services. Which is the legal term for guidance regarding the different kinds of credit offered by lenders, including home loan mortgages. They may not need this license if they are working for an aggregator, for instance, as a franchisee. In both these situations, they need to comply with the regulations laid down by the Australian Securities and Investments Commission (ASIC).

These regulations, which are stipulated by Australian legislation, require mortgage brokers to comply with what are called “responsible lending” and “best interest” obligations. Responsible lending obligations mean brokers have to suggest “suitable” home loans. This means loans that you can easily qualify for,  actually meet your needs, and don’t prove unnecessarily challenging for you.

Starting 1 January 2021, mortgage brokers must comply with best interest obligations in addition to responsible lending obligations. These require mortgage brokers to act in the best interest of their customers and also requires them to prioritise their customers’ interests over their own. For instance, a mortgage broker may not recommend a lender who gives them a commission if that lender’s home loan offer does not benefit that particular customer.

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.

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.

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 much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

  • A larger deposit tells a lender that you’re a great saver, which could help increase the chances of your home loan application getting approved.
  • The more money you pay as a deposit, the less you’ll have to borrow in your home loan. This could mean paying off your loan sooner, and being charged less total interest.
  • If your deposit is less than 20 per cent of the property value, you might incur additional costs, such as Lenders Mortgage Insurance (LMI).

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

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 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.

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.

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

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

What is a specialist lender?

Specialist lenders, also known as non-conforming lenders, are lenders that offer mortgages to ‘non-vanilla’ borrowers who struggle to get finance at mainstream banks.

That includes people with bad credit, as well as borrowers who are self-employed, in casual employment or are new to Australia.

Specialist lenders take a much more flexible approach to assessing mortgage applications than mainstream banks.

Mortgage Calculator, Repayments

The money you pay back to your lender at regular intervals. 

Why should you trust Real Time Ratings?

Real Time Ratings™ was conceived by a team of data experts who have been analysing trends and behaviour in the home loan market for more than a decade. It was designed purely to meet the evolving needs of home loan customers who wish to merge low cost with flexible features quickly. We believe it fills a glaring gap in the market by frequently re-rating loan products based on the changes lenders make daily.

Real Time Ratings™ is a new idea and will change over time to match the frequently-evolving demands of the market. Some things won’t change though – it will always rate all relevent products in our database and will not be influenced by advertising.

If you have any feedback about Real Time Ratings™, please get in touch.

What is the average annual percentage rate?

Also known as the comparison rate, or sometimes the ‘true rate’ of a loan, the average annual percentage rate (AAPR) is used to indicate the overall cost of a loan after considering all the fees, charges and other factors, such as introductory offers and honeymoon rates.

The AAPR is calculated based on a standardised loan amount and loan term, and doesn’t include any extra non-standard charges.