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2.74%

Variable

2.76%

loans.com.au

$1.4k

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

2.97

/ 5
More details

2.59%

Variable

2.64%

Reduce Home Loans

$1.4k

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

4.45

/ 5
More details

2.79%

Variable

2.86%

Reduce Home Loans

$1.4k

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

2.63

/ 5
More details

2.89%

Variable

2.92%

Reduce Home Loans

$1.4k

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

2.58

/ 5
More details

1.98%

Fixed - 1 year

2.38%

Homestar Finance

$1.3k

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

3.46

/ 5
More details

2.06%

Fixed - 3 years

2.38%

Homestar Finance

$1.3k

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

3.66

/ 5
More details

Learn more about home loans

When selecting your home loan, it’s important to consider what features and benefits are available. As well as comparing the interest rates and fees, it’s often worth looking at what special deals and introductory offers may be available with different home loan products, such as discounts, cashback or frequent flyer points. As with any credit product, it’s also important to know your loan term and the different repayment types available. Before committing to a home loan product, it could be a good idea to read through the product disclosure statement.

Discounted interest rates

Some banks and mortgage lenders offer to reduce the rate of interest charged on your home loan, either as a permanent discount over the life of your loan, or as a temporary reduction during your loan’s introductory “honeymoon” period.

Interest rate discounts can make a big difference to the cost of your mortgage. Lower loan repayments can take the pressure off your budget, so you can spend your money on something else. Alternatively, if you can afford to make additional repayments onto your home loan, you can a make a valuable head start on shrinking your mortgage principal and reducing your future interest repayments. This could get you closer to paying off your property ahead of schedule.

However, it’s important to remember that no honeymoon lasts forever. Once your home loan’s introductory period expires, your discounted interest rate will revert back to the lender’s standard variable rate. This can be a shock to your budget if you’re not careful, and could leave you struggling to afford your new repayments. Consider finding out when your loan will revert, what the revert rate will be, and how your monthly repayments will be affected. Then plan your budget accordingly.

Fixed rate home loans vs variable rate home loans

Fixing your home loan interest rate can be a lot like getting a discounted introductory rate offer. By locking in the interest rate on your home loan for a few years, you can keep your home loan repayments consistent for a limited time, for much simpler budgeting.

However, fixed interest rates aren’t always lower than variable interest rates, which may increase or decrease over time. It’s possible to find yourself stuck on a higher fixed rate while other variable rate customers are enjoying interest savings and lower loan repayments from discounted rates.

Just like other introductory rate offers, it’s a good idea to check what variable interest rate your home loan will revert to once your fixed interest period ends, and budget your monthly repayments accordingly to make sure you’re not caught off-guard.

With heated competition between the banks, it could also be worth shopping around for different fixed interest rates and variable rates across different lenders. Take note that the lowest interest rate may not always indicate the cheapest deal, as fees and charges, such as application fees, also come into play.

Cashback deals

Some mortgage lenders offer to reward new customers with a fat stack of cash, to use however you like. Cashback rewards on new home loans can often get you a couple of thousand dollars in your bank account. It’s also common for banks to offer refinance cashback perks to attract new customers already with other lenders.

Cashback deals can be valuable under the right circumstances. Buying a home or investment property often involves paying a range of fees, charges and taxes such as stamp duty, which can leave your savings rather drained. Plus, you may also have moving costs or renovation expenses to consider. Having a couple of thousand extra dollars available can provide some extra budget relief, allowing you to keep your life on track after your major purchase.

Keep in mind that in some cases, the money you’d receive from a cashback offer may not provide as much value as the long-term savings you’d enjoy by taking out another loan with a lower interest rate or less fees. It could be a good idea to calculate the costs of different loans, compare the value of any rewards with the savings you could enjoy, and make a decision based on what you think may be best for you.

Given the competitive home loan market, it might also be worthwhile weighing up the cashback perks offered by different banks, though it isn’t advised to base your home loan decision solely on this.

Reward points

Several banks and mortgage lenders have partnerships with major airlines, allowing you to earn reward points by using financial products such as credit cards. These points can be redeemed for plane tickets and seat upgrades, as well as travel experiences and a variety of other products and services from the rewards program.

These partnerships sometimes extend to home loans, where signing up for a mortgage can earn you a one-time reward of bonus points, similar to a cashback deal. Some loans even offer reward points for making mortgage payments, so paying your mortgage can bring you closer to taking a holiday or enjoying other rewards.

Much like cashback offers, it’s often worth comparing the value of the reward points you could receive to the loan’s cost. Sometimes, a simpler “no frills” loan with a low rate and fees can offer greater value than one that offers frequent flyer rewards. Also, it’s often worth checking the terms and conditions of the rewards program linked to the offer – if you’re unlikely to use your points before they expire, for example, you may not get much value out of them.

Waived fees

Taking out a home loan often means paying an establishment or application fee, covering the administration costs of setting up your loan. However, some banks offer to waive this fee or other upfront expenses to help ease your financial pressure.

Some home loan products also charge ongoing fees, paid monthly or annually, to help cover the cost of maintaining your mortgage. Depending on your loan type, some lenders may offer to waive these ongoing mortgage fees for selected customers, mostly for a set period or, less commonly, over the life of the loan.

As always, consider looking at the home loan’s other features, benefits and costs to work out the overall value of the fee waivers before you sign on the dotted line.

Note that if your home loan qualifies for a fee waiver, you may get a different comparison rate from the one listed. You may want to double check and see how this might affect how it compares with the other home loan products you were considering.

What about low deposit home loans?

Some lenders offer home loans where you can apply with a deposit of less than the customary 20 per cent of the property value. This means you can spend less time saving a deposit and enter the property market sooner.

While it’s possible to get a home loan with a 10 or five per cent deposit, this typically also means covering the cost of a lender’s mortgage insurance (LMI) policy, which covers your lender (and not you) against the risk that you’ll default on the mortgage. Generally, the lower your deposit, the higher the cost of LMI, which could be thousands or tens of thousands of dollars. Some lenders may offer to reduce this cost for selected borrowers (such as first home buyers or other new owner occupiers), but it’s still a significant expense to consider. Most lenders will have rules around the maximum LVR (loan to value ratio) a borrower can have, so it’s important to take note of this before applying.

If you can find a home loan that offers a guarantor option, it may be possible to apply for a mortgage with a low deposit, or even no deposit at all. A guarantor is a relative that offers to secure your mortgage deposit with the value of their own home, and agrees to take responsibility if you can’t pay your home loan. It’s a big ask, so make sure you and your guarantor know the risks involved before agreeing to the arrangement.

Special features

A home loan that offers the right features and benefits for your needs can provide just as much value as a special deal. For example:

  • Extra repayments directly reduce the principal you owe on your mortgage. This can reduce your future interest charges, and bring you closer to paying off the property and exiting the loan early.
  • A redraw facility can be used to withdraw any additional repayments you’ve made on a home loan, and put them back in your pocket. This can let you put your spare savings onto your mortgage to help reduce your interest repayments, while still being able to access this money if a sudden expense comes up.
  • An offset account is a savings or transaction account attached to your home loan, where you can deposit or withdraw money as often as you like. Money in your offset account is included when calculating interest on your loan amount, meaning you may pay less in interest repayments. For example, if you have a $300,000 home loan, and an offset account with $10,000 saved, you’ll be charged interest as if you only owed $290,000 on your mortgage.

Keep in mind that the more features and benefits that are included in a home loan offer, the more it may cost. Check the interest rates and fees, and consider whether a cheaper “no frills” home loan could provide you with a more competitive offer.

What are the terms and conditions?

Many special offers on home loans require you to meet certain eligibility criteria, on top of the standard lending criteria. For example, a home loan with a discounted interest rate may only be available to borrowers taking out a new loan as an owner occupier, paying principal & interest, with a deposit of at least 20 per cent or a maximum LVR of 80 per cent. If you hold an investment loan, or want to pay interest-only, you may not be eligible for some offers.

Alternatively, you may be able to enjoy a lower rate on your home loan if you bundle the mortgage offer with other financial products from the same bank, such as a transaction account and a credit card. This could also get you a better deal on these products, though you may need to pay an annual package fee in some cases.

Before you make a home loan application based on its special offers and rewards, make sure that it’s a home loan that will suit your financial situation, and that you can fulfil the requirements to enjoy the most value from the rewards on offer.

 

Frequently asked questions

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. 

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 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 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 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.

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 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.

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 an ongoing fee?

Ongoing fees are any regular payments charged by your lender in addition to the interest they apply including annual fees, monthly account keeping fees and offset fees. The average annual fee is close to $200 however there are almost 2,000 home loan products that don’t charge an annual fee at all. There’s plenty of extra costs when you’re buying a home, such as conveyancing, stamp duty, moving costs, so the more fees you can avoid on your home loan, the better. While $200 might not seem like much in the grand scheme of things, it adds up to $6,000 over the life of a 30 year loan – money which would be much better off either reinvested into your home loan or in your back pocket for the next rainy day.

Example: Anna is tossing up between two different mortgage products. Both have the same variable interest rate, but one has a monthly account keeping fee of $20. By picking the loan with no fees, and investing an extra $20 a month into her loan, Josie will end up shaving 6 months off her 30 year loan and saving over $9,000* in interest repayments.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

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.

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 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 extra repayments?

Additional payments to your home loan above the minimum monthly instalments, which can help to reduce the loan’s term and remaining payable interest.

Do mortgage brokers need a consumer credit license?

In Australia, mortgage brokers are defined by law as being credit service or assistance providers, meaning that they help borrowers connect with lenders. Mortgage brokers may not always need a consumer credit license however if they’re operating solo they will need an Australian Credit License (ACL). Further, they may also need to comply with requirements asking them to mention their license number in full.

Some mortgage brokers can be “credit representatives”, or franchisees of a mortgage aggregator. In this case, if the aggregator has a license, the mortgage broker need not have one. The reasoning for this is that the franchise agreement usually requires mortgage brokers to comply with the laws applicable to the aggregator. If you’re speaking to a mortgage broker, you can ask them if they receive commissions from lenders, which is a good indicator that they need to be licensed. Consider requesting their license details if they don’t give you the details beforehand. 

You should remember that such a license protects you if you’re given incorrect or misleading advice that results in a home loan application rejection or any financial loss. Brokers are regulated by the Australian Securities & Investment Commission (ASIC), as per the National Consumer Credit Protection (NCCP) Act. 

How to break up with your mortgage broker

If you find a mortgage broker giving you generic advice or trying to sell you a competitive offer from an unsuitable lender, you might be better off  breaking up with the mortgage broker and consulting someone else. Breaking up with a mortgage broker can be done over the phone, or via email. You can also raise a complaint, either with the broker’s aggregator or with the Australian Financial Complaints Authority as necessary.

As licensed industry professionals, mortgage brokers have the responsibility of giving you accurate advice so that you know what to expect when you apply for a home loan. You may have approached the mortgage broker, for instance, because you have questions about the terms of a home loan a lender offered you. 

You should remember that mortgage brokers are obliged by law to act in your best interests and as part of complying with The Australian Securities and Investments Commission’s (ASIC) regulations. If you feel you didn’t get the right advice from the mortgage broker, or that you lost money as a result of accepting the broker’s suggestions regarding a lender or home loan offer, you can file a complaint with the ASIC and seek compensation. 

When you first speak to a mortgage broker, consider asking them about their Lender Panel, which is the list of lenders they usually recommend and who may pay them a commission. This information can help you decide if the advice they give you has anything to do with the remuneration they may receive from one or more lenders.

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 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. 

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.