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2.94%

Variable

2.87%

Athena Home Loans

$1,413

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

2.34

/ 5
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2.29%

Fixed - 3 years

2.74%

UBank

$1,314

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

2.22

/ 5
View Now
More details

2.74%

Variable

2.76%

loans.com.au

$1,382

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

2.97

/ 5
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More details

2.79%

Variable

2.79%

Reduce Home Loans

$1,390

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

2.63

/ 5
View Now
More details

2.79%

Variable

2.79%

Athena Home Loans

$1,390

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

2.67

/ 5
View Now
More details

2.74%

Fixed - 5 years

2.83%

UBank

$1,382

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

2.29

/ 5
View Now
More details

2.89%

Variable

2.83%

Athena Home Loans

$1,406

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

2.45

/ 5
View Now
More details

2.89%

Variable

2.89%

UBank

$1,406

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

2.57

/ 5
View Now
More details

2.89%

Variable

2.89%

Reduce Home Loans

$1,406

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

2.58

/ 5
View Now
More details

3.04%

Variable

2.93%

Athena Home Loans

$760

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

1.74

/ 5
View Now
More details

3.02%

Variable

3.05%

Yard

$1,426

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

2.36

/ 5
More details

2.79%

Fixed - 1 year

3.23%

Adelaide Bank

$698

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

2.17

/ 5
More details

3.29%

Variable

3.71%

NAB

$823

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

1.60

/ 5
More details

2.49%

Variable

2.52%

Homestar Finance

$1,344

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

3.66

/ 5
More details

2.69%

Fixed - 1 year

2.54%

Homestar Finance

$1,375

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

3.12

/ 5
More details

2.69%

Fixed - 2 years

2.55%

Homestar Finance

$1,375

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

3.03

/ 5
More details

2.69%

Fixed - 3 years

2.57%

Homestar Finance

$1,375

Redraw facility
Offset Account
Borrow up to 70%
Extra Repayments
Interest Only
Owner Occupied

2.94

/ 5
More details

2.59%

Variable

2.61%

Homeloans.com.au

$1,359

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

3.04

/ 5
More details

2.59%

Variable

2.61%

Credit Union SA

$1,359

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

3.22

/ 5
More details

2.59%

Variable

2.62%

Homestar Finance

$1,359

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

3.44

/ 5
More details
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Thinking about investing in property? Many people invest in property to enjoy a steady stream of rental income, while their investment hopefully grows in value over time. 

Investment loans are a lot like other home loans, except you won’t be living in the property you buy. However, it's not always easy to secure an investment loan with a very low interest rate.

What rates can I get on an investment loan?

As with owner-occupier mortgages, you can choose an investment loan with:

  • a variable interest rate, which may rise or fall over time, making your repayments cost more or less;
  • a fixed rate, which locks you into a specific repayment for a period of time, or;
  • a split rate, where you pay a mix of variable and fixed interest on your mortgage.

It’s important to remember that the best investment loan for you may not be the one with the lowest interest rate. If you compare different investment loans, you may find an option with features and benefits that offer you extra value.

How does an investment loan compare to other mortgages?

Investment loan rates may be higher than the interest rates for similar owner-occupier home loans, due to the higher financial risks involved. This means it’s important to compare interest rates, fees, features and benefits of different investment mortgage options, to ensure you choose one that suits your needs. 

Two loan types that are popular with investors include:

  1. Interest-only investment loans: For a limited time, your mortgage payments will only cover the interest charges and won’t reduce the amount you owe. This can help keep your repayments more affordable until the interest-only period expires and the loan reverts to principal and interest repayments. 
  2. Line of credit: A mortgage where you can use your equity in the property as security to borrow money. This line of credit works similarly to a credit card with a higher limit, so you can borrow and repay money as you need it, only paying interest on what’s currently owing. 

Before you apply for one of these loans, or other investment options, be sure to consider the features and benefits, as well as the interest rates, fees and other charges, and think about which options may provide the most value in your situation. 

How to get a low interest rate on an investment loan

Most banks and other mortgage lenders offer their lowest interest rates to the most secure borrowers. The lower the risk that you’ll default on your repayments, the lower the rates you may be offered. 

Because investment loans are often considered riskier than owner-occupier home loans, borrowers may need to fulfil strict eligibility criteria to enjoy some of the lowest interest rates. 

To help improve your investment loan application’s chances of being approved, think about the following:

  • Try to save a large deposit: Some investment loans already require larger than average deposits, but the larger the deposit and/or equity you can provide to secure a mortgage, the lower the interest rate you may be offered. 
  • Check your credit score: If you have bad credit, it may be harder to successfully apply for an investment loan. You can check your credit score for free, and consider ordering a copy of your credit report to see if there are any errors that can be corrected. Plus, comprehensive credit reporting means that positive credit behaviours such as paying off other outstanding debts may help improve your credit score.
  • Compare investment loans from different lenders: As well as comparing interest rates, look at the fees, features and other benefits. Consider which investment mortgage options may offer the most value in your financial situation, and check their eligibility criteria to see which ones you’re most likely to qualify for. 
  • Ask for help: Consider contacting a mortgage broker for assistance selecting and applying for an investment loan. Brokers may be able to negotiate with lenders on your behalf to get you a lower rate, and may have access to special mortgage deals that aren’t normally advertised. 

 

What is an interest-only loan? How do I work out interest-only loan repayments?

An ‘interest-only’ loan is a loan where the borrower is only required to pay back the interest on the loan. Typically, banks will only let lenders do this for a fixed period of time – often five years – however some lenders will be happy to extend this.

Interest-only loans are popular with investors who aren’t keen on putting a lot of capital into their investment property. It is also a handy feature for people who need to reduce their mortgage repayments for a short period of time while they are travelling overseas, or taking time off to look after a new family member, for example.

While moving on to interest-only will make your monthly repayments cheaper, ultimately, you will end up paying your bank thousands of dollars extra in interest to make up for the time where you weren’t paying off the principal.

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 have a poor credit rating. Am I still able to get a mortgage?

Some lenders still allow you to apply for a home loan if you have impaired credit. However, you may pay a slightly higher interest rate and/or higher fees. This is to help offset the higher risk that you may default on your repayments.

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.

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.

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 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.

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.

How do I calculate monthly mortgage repayments?

Work out your mortgage repayments using a home loan calculator that takes into account your deposit size, property value and interest rate. This is divided by the loan term you choose (for example, there are 360 months in a 30-year mortgage) to determine the monthly repayments over this time frame.

Over the course of your loan, your monthly repayment amount will be affected by changes to your interest rate, plus any circumstances where you opt to pay interest-only for a period of time, instead of principal and interest.

Mortgage Calculator, Loan Purpose

This is what you will use the loan for – i.e. investment. 

How do I know if I have to pay LMI?

Each lender has its own policies, but as a general rule you will have to pay lender’s mortgage insurance (LMI) if your loan-to-value ratio (LVR) exceeds 80 per cent. This applies whether you’re taking out a new home loan or you’re refinancing.

If you’re looking to buy a property, you can use this LMI calculator to work out how much you’re likely to be charged in LMI.

What happens when you default on your mortgage?

A mortgage default occurs when you are 90 days or more behind on your mortgage repayments. Late repayments will often incur a late fee on top of the amount owed which will continue to gather interest along with the remaining principal amount.

If you do default on a mortgage repayment you should try and catch up in next month’s payment. If this isn’t possible, and missing payments is going to become a regular issue, you need to contact your lender as soon as possible to organise an alternative payment schedule and discuss further options.

You may also want to talk to a financial counsellor. 

How personalised is my rating?

Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating. 

We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time. 

How often is your data updated?

We work closely with lenders to get updates as quick as possible, with updates made the same day wherever possible.

How can I get a home loan with no deposit?

Following the Global Financial Crisis, no-deposit loans, as they once used to be known, have largely been removed from the market. Now, if you wish to enter the market with no deposit, you will require a property of your own to secure a loan against or the assistance of a guarantor.

How much of the RBA rate cut do lenders pass on to borrowers?

When the Reserve Bank of Australia cuts its official cash rate, there is no guarantee lenders will then pass that cut on to lenders by way of lower interest rates. 

Sometimes lenders pass on the cut in full, sometimes they partially pass on the cut, sometimes they don’t at all. When they don’t, they often defend the decision by saying they need to balance the needs of their shareholders with the needs of their borrowers. 

As the attached graph shows, more recent cuts have seen less lenders passing on the full RBA interest rate cut; the average lender was more likely to pass on about two-thirds of the 25 basis points cut to its borrowers.  image002

How common are low-deposit home loans?

Low-deposit home loans aren’t as common as they once were, because they’re regarded as relatively risky and the banking regulator (APRA) is trying to reduce risk from the mortgage market.

However, if you do your research, you’ll find there is still a fairly wide selection of banks, credit unions and non-bank lenders that offers low-deposit home loans.

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 an ombudsman?

An complaints officer – previously referred to as an ombudsman -looks at formal complaints from customers about their credit providers, and helps to find a fair and independent solution to these problems.

These services are handled by the Australian Financial Complaints Authority, a non-profit government organisation that addresses and resolves financial disputes between customers and financial service providers.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.