Find and compare low interest 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

3.85

/ 5
More details

2.29%

Fixed - 3 years

3.13%

Heritage Bank

$1.3k

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

3.64

/ 5
More details

1.95%

Fixed - 3 years

2.27%

UBank

$1.3k

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

3.38

/ 5
More details

2.14%

Fixed - 1 year

2.35%

UBank

$1.3k

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

2.42

/ 5
More details

2.59%

Fixed - 5 years

2.46%

UBank

$1.4k

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

2.79

/ 5
More details

2.29%

Fixed - 3 years

2.65%

UBank

$1.3k

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

2.51

/ 5
More details

2.29%

Variable

2.23%

Athena Home Loans

$1.3k

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

3.72

/ 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

2.09%

Fixed - 2 years

3.08%

IMB Bank

$1.3k

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

2.48

/ 5
More details

2.18%

Fixed - 2 years

3.72%

Newcastle Permanent

$1.3k

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

2.62

/ 5
More details

Learn more about home loans

Whether you're planning to buy a new home where you and your loved ones can live, or investing in property in hopes of a return, looking for a low interest home loan is a wise move. After all, the smaller your home loan repayments, the more affordable your loan will be, and the less of an impact it will make on your finances overall.

But a low interest rate isn’t the only factor to keep in mind when selecting or even making home loan comparisons. Depending on whether you’re investing, planning to occupy a property, or even refinancing an existing mortgage, there are a range of other features to consider when deciding which home loan product is right for you.

What is a low interest rate?

Nobody wants to spend more money than they have to, so it’s important to be confident you’re getting a good interest rate on your home loan. But how can you tell what counts as a low rate?

Because banks and mortgage lenders regularly update their home loan offers, it can be hard to know if you’re getting a low interest rate or not. For example, just a few years ago, interest rates below 4 per cent were considered low, but after multiple cash rate cuts from the Reserve Bank of Australia (RBA), it’s possible to find much lower home loan interest rates, including some below 2 per cent. 

The RBA monitors home loan interest rates and tracks the average interest rates for both new and existing mortgage offers. If you can find mortgage offers below the RBA’s average, you may consider these to be low rate loans. 

How do I find the lowest interest rate?

One of the simplest ways to find a low interest rate is to look at RateCity’s home loan tables, and sort the available offers by their advertised rate or comparison rate (which includes the cost of interest plus standard fees and charges). 

Keep in mind that the home loan with the lowest interest rate on the table may not be the best home loan for you. Be sure to check if it offers useful features and benefits that suit your financial situation, and confirm whether or not you can fulfil the loan’s eligibility criteria. For example, if you’re an investor, you won’t be eligible for a low rate owner-occupier home loan. 

How important are low interest rates?

Mortgages with low interest rates are understandably popular among borrowers, as they involve paying less money to the lender on top of each instalment of the loan’s principal.

Some lenders offer heavily-discounted “Honeymoon Rates” as a special offer for the early stage of a loan, which typically revert to standard variable interest rates once this introductory period expires.

On the surface, these may appear to be lowest interest home loan rates you can find, but if you don’t take into account the introductory period caveat when planning your budget, you could find yourself paying much more than you initially expected.

It’s also important to remember that many lenders also charge fees with their mortgages, which can make a significant impact on the budget of a borrower. These can include upfront fees or application fees, ongoing annual fees, extra or early repayment fees and redraw fees. A mortgage with a low interest rate and high ongoing fees may ultimately turn out to be more expensive in total than a mortgage with a higher interest rate with lower fees and charges.

One way to get an idea of the relative costs of different home loans is to look at their Comparison Rates, which combine a lender's advertised interest rates with their standard fees and charges.

However, you should keep in mind that a loan’s comparison rate may not take its nonstandard fees and charges into account, or any bonus features offered by the lender that could add extra value to the loan.

Are you an investor?

Lenders offer different types of home loans to owner occupiers and to investors, to better suit the different financial positions of these property purchasers.

While there are always exceptions, home loans for owner occupiers tend to offer low interest rates that are lower on average than what is found in investment home loans. This is partially due to government regulations surrounding investment property lending, and because lenders tend to consider investors to be greater financial risks than owner occupiers.

Fixed or variable interest rate?

Once you find a low interest loan, you should be able to calculate the affordability of its repayments. But keep in mind that the mortgage’s low interest rate may not stay that low forever!

Many mortgages have variable interest rates, where the amount of interest the lender charges is affected by the national cash rate set by the Reserve Bank of Australia (RBA). If the RBA keeps the cash rate on hold, the amount of interest you pay should remain steady. If the cash rate is cut, your lender should pass the interest cut on to you, reducing your home loan repayments.

However, the RBA may also choose to increase the cash rate, which could lead to your interest payments becoming more expensive if your lender passes on this rate rise. A sustained period of regular rate rises could lead to your mortgage repayments growing much more expensive than what they were originally, potentially putting you at risk of mortgage stress.

Some lenders fix their mortgage interest rates for anywhere from one to twelve years. This can help to keep your repayments stable and comfortably affordable during the fixed period, which can prove especially valuable to first home buyers hoping to build up their initial equity. However, with one of these fixed rate loans, you also won’t benefit from any savings if the RBA lowers the cash rate.

If you’re uncertain whether a variable or fixed rate home loan best suits your finances, you may be able to choose a split rate home loan, which involves paying a fixed rate of interest on a percentage of your loan’s principal, and a variable rate on the remaining balance. A split rate home loan lets you enjoy some of the advantages of a variable rate home loan, such as savings from rate cuts, while at the same time benefiting from the security of a fixed interest rate, which can help keep your repayments from getting too high if rates rise.

Mortgage stress explained

You may know that borrowers can run the risk of mortgage stress if interest rates increase, but what is mortgage stress?

Various banks and mortgage lenders define mortgage stress differently. One common benchmark is when a household has to devote at least 30 per cent of its pre-tax income to servicing its mortgage.

Households that are coping reasonably well with their monthly repayments can find themselves suffering mortgage stress if interest rates suddenly increase, or increase by a significant amount in a short period of time.

For example, between October 2009 and November 2010, the Reserve Bank of Australia increased the official cash rate by 1.50 percentage points. Imagine if you took out a home loan at, say, 4.50 per cent, and your lender then increased your interest rate by 1.50 percentage points over the next 13 months. Here’s what would happen if you had a 30-year loan for $350,000, $500,000, $650,000 or $800,000:

  $350,000 $500,000 $650,000 $800,000
Monthly repayments at 4.50% $1,773 $2,533 $3,293 $4,053
Monthly repayments at 6.00% $2,098 $2,998 $3,897 $4,796
Increase $325 $465 $604 $743

The great thing about a home loan calculator is that you can use it to research what would need to happen for you to fall into mortgage stress, and then plan accordingly.

Choosing your loan term 

If you’re looking at low interest home loans to hopefully minimise how much interest you’ll pay on a property, then you may also want to consider the length of time that you’ll take to pay off your loan amount. Many mortgages start with terms of 25 or 30 years, though shorter and longer loan terms do exist.

By paying back your mortgage over a longer term, you’ll be making a larger number of repayments, each one for a smaller percentage of the principal. This can help to keep your repayments on the low side, so your mortgage remains more affordable from month to month. However, more repayments means more interest charges, so you may ultimately pay more in total interest over the longer loan term than if you’d opted for a shorter term.

A shorter loan term involves paying off your principal over a shorter period. Fewer repayments means fewer interest charges over the life of the loan, so you can ultimately pay less interest on top of your loan’s principal. However, this does mean that each repayment will be for a larger percentage of your loan principal, making your mortgage less affordable from month to month.

If you're looking to refinance your home loan, it's important to consider how far you are into your current loan term so that you don't fall into the trap of extending your loan term without realising. If you are already 5 years into a 30-year loan, for example, refinancing to another 30-year loan could mean losing money in the long run as you might pay more interest over the life of the loan.

Your deposit

Most lenders require you to pay a certain amount of money up-front when you apply for a home loan. This amount varies by lender, but around 20 per cent of the property value is not uncommon. If you’re looking for a low rate loan, you’ll likely need to pay the full deposit to help reduce the lender’s risk.

If you can’t afford a full deposit on the mortgage you’re looking at, there may be other options available to you.

Some lenders can offer a mortgage with a higher Loan to Value Ratio (LVR), where you pay a smaller deposit and borrow a greater percentage of the property’s value instead. However, for these options you’ll likely be required to pay the extra expense of Lender’s Mortgage Insurance (LMI) to help protect the lender in case you default on your repayments.

One option to avoid pricey LMI is a Guarantor loan, where a close relative guarantees your home loan with the equity in their own property in lieu of the full deposit. This option can prove risky for the guarantor though, so be sure they understand what’s involved first.

Offset accounts and redraw facilities

A low interest rate on your home loan can help to keep your personal finances manageable, but some lenders also offer additional options that can be helpful in this area.

An offset account is a savings or transaction account that’s linked to your home loan. Any money paid into this account is included when the lender calculates its interest charges, which can help you save some money.

Example: If you’ve paid back $200,000 of a $500,000 home loan, and have $15,000 in your offset account, your interest repayments will be calculated on a remaining balance of $285,000 rather than $300,000.

A redraw facility will allow you to withdraw surplus money from your mortgage, provided you’ve made additional repayments. This can allow you to confidently make extra repayments onto your home loan, without worrying about finding yourself short on funds in case of emergency.

Even if you never use the redraw facility, paying extra money onto your home loan will bring you closer to paying it off ahead of schedule and potentially saving money in interest payments. Just me mindful that some lenders may charge redraw fees.

Do banks or non-banks offer the lowest interest rates?

When looking at interest rates on their own, in many cases non-bank lenders will make lower offers than the banks to stay competitive. And as these lenders are often smaller organisations than the big banks, they may be able to offer more personalised services to their customers, or possibly offer more flexible lending criteria to better suit a wider range of borrowers.

However, just because a mortgage has a low rate doesn’t mean it will necessarily offer the greatest value.

It's often good to keep in mind that while the lowest home loan interest rates can be offered by any lender, a low rate home loan that works best for you will likely be better for your needs in the long term. 

Larger banks are often able to offer full home loan packages, bundling the bank’s full range of services (transaction/savings accounts, credit cards etc.) along with the mortgage. Plus, with most banks you’ll have the option to visit a branch to talk over your home loan, which may not be possible with some online-only lenders.

Where can I find an interest rate under 4 per cent?

Home loan rates change regularly for a range of different reasons, meaning it could be more or less difficult to find an interest rate under 4 per cent depending on the state of the market.

At the time of writing, the RateCity database has a number of home loans with advertised rates of under 2 per cent, however this will typically fluctuate with the market.

In order to determine whether a home loan charges low or high interest, it may be helpful to understand what the average is at the time of your comparison. The Reserve Bank of Australia (RBA) records average home loan interest rates in Australia, which might help you get a better idea of what to expect.

Compare low interest mortgages

When deciding on the right loan type to suit your unique financial situation, low interest rates are just one of many available factors to consider. To make your low interest rate mortgage comparison process easier and more efficient, RateCity collects the essential information regarding a wide variety of home loans all in one place, allowing you to quickly narrow down your shortlist of preferred lenders. 

By using RateCity's home loan comparison system to help you save time and effort on your home loan search, you can invest more of your energy into working out which loan options will provide features and benefits that will best suit your finances and your lifestyle, all while enjoying affordable repayments offered by low interest rates.

RateCity's Mortgage Calculator may also come in handy if you'd like to get an estimate of the potential cost of your weekly, fortnightly or monthly repayments. It allows you to compare different comparison rates, different loan amounts and different terms to give you an idea of what your regular repayments might look like.

Frequently asked questions

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 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.

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.

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 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.

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 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 are repayments on a $250K mortgage?

The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.

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.

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 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.

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.

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 is a comparison rate?

The comparison rate is a more inclusive way of comparing home loans that factors in not only on the interest rate but also the majority of upfront and ongoing charges that add to the total cost of a home loan.

The rate is calculated using an industry-wide formula based on a $150,000 loan over a 25-year period and includes things like revert rates after an introductory or fixed rate period, application fees and monthly account keeping fees.

In Australia, all lenders are required by law to publish the comparison rate alongside their advertised rate so people can compare products easily.

Mortgage Calculator, Repayment Type

Will you pay off the amount you borrowed + interest or just the interest for a period?

Mortgage Calculator, Interest Rate

The percentage of the loan amount you will be charged by your lender to borrow. 

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

Savings over

Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

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. 

Mortgage Balance

The amount you currently owe your mortgage lender. If you are not sure, enter your best estimate.