We put every effort into ensuring information on Finder is accurate. This article was reviewed by John Pidgeon from our Editorial Review Board as part of our fact checking process.
A home loan is the money you borrow to buy a property. You save a deposit first, which is usually 5-20% of the property's value and then you borrow the rest. This is your loan amount or your loan principal.
Your lender charges you interest based on the loan principal amount and your home loan's interest rate. The higher the home loan interest rate, the higher your repayments will be.
| Response | |
|---|---|
| Yes | 80.67% |
| No | 19.33% |
A good home loan comparison starts with a careful look at interest rates. The lower the rate, the lower your repayments will be.
Let's compare 2 otherwise identical home loans with slightly different interest rates.*
| Interest rate | 7.26% | 5.8% |
|---|---|---|
| Loan amount | $607,963 | $607,963 |
| Loan term | 30 years | 30 years |
| Monthly repayment | $4,152 | $3,568 |
| Monthly saving | N/A | $584 |
| Annual saving | N/A | $7,008 |
As you can see, with the lower interest rate, you save $584 a month – or $7,008 a year.
*We're using the average owner-occupier home loan size from the ABS, the average variable rate loan in Finder's database of the full market and the lowest rate variable rate.
Home loan comparison is hard if you have no clue what a low rate looks like. That's why we analyse all the loans in our database to find the most competitive rates each month.
The graph below shows the market's lowest* fixed and variable rates for home buyers and investors.
*Rates must have LVRs of 80% or higher and exclude unique or unusual loan products that aren't suitable for most borrowers.
Learn more about finding a cheap home loan
On 07 May the official cash rate was held at:
4.35%
The lowest variable owner-occupier rate on the market is:
5.69%
Assuming the average owner occupier home loan size of $607,963 you would be making monthly repayments of:
$3,525
Looking beyond the interest rate, you need to compare home loan fees and features too.
Compare the feesExamples of home loan fees include the following:
Consider the featuresThe following are the most common and useful home loan features:
Look at a loan's comparison rateThe comparison rate is designed to help borrowers understand the true cost of a loan by adding in fee costs over time. But it's only a hypothetical calculation based on a specific loan amount and term. It's not that useful because every borrower's situation is unique.
You're better off working out how much your loan will cost you every month and factoring in the cost of fees on top of that.
The loan-to-value ratio (LVR) is another way of defining the minimum deposit you have to save. Banks prefer a maximum LVR of 80%, meaning you need a 20% deposit. Many loans also have a maximum insured LVR of up to 95%. This means that you can get the loan with a smaller deposit, but you will need to pay lenders mortgage insurance (LMI) if your deposit is under 20%. Some professions enable higher LVRs without the need for LMI. Typically these professions include doctors, lawyers and accountants, and more recently police officers, nurses and other university trained occupations, but different banks have different policies in relation to this benefit.
Finder's home loans awards celebrate the best home loan products across 12 different categories. Our experts analysed 12 months' worth of interest rate and fee data to find the best solutions for any borrower type. Our team of experts reviewed over 3,000 home loan products from across 200+ lenders to select our Finder Home Loans Awards winners for 2024.
We spoke to some industry experts for more inside tips on getting a good home loan.
Susan Mitchell, CEO - Broker at REA Group, and former CEO of Mortgage Choice
"There is a common misconception that going straight to the lender you bank with is going to get you the greatest outcome when in reality, borrowers are doing themselves a disservice by not comparing options from a range of lenders to find the most suitable deal for their goals and needs.
"Not getting home loan pre-approval is another mistake many borrowers make. This is especially the case if you are applying for your first home loan. A home loan pre-approval is useful when buying your first home as it helps you understand what property you can afford to buy before you start shopping around."
"Lenders will assess how 'risky' you are to lend money to, so it's important that you show them that you have good money habits. Don't spend more than you earn, cut back on discretionary spending 3-6 months before you apply for a home loan and make sure you've established a savings history so you can demonstrate that you are responsible with your money and can make your home loan repayments each month."
Josh Bartlett, mortgage broker and managing director, Mortgage Advice Bureau.
"It comes down to money personality. If a couple have very different money personalities, say a husband and wife where one is very good with their money and the other likes to spend, you could structure the loan so they're both happy with how that money is going to be used.
"I'd suggest a loan with a multi offset account, allowing the couple to have their own accounts so they can control their spending in ways they feel comfortable with. As long as everything's going fine, they'll still be married in the next 5 years."
"Again, it comes down to the individual. Are you okay if your rate falls up or down? Right now, are rates going to go up? We don't have a crystal ball.
"You only ever fix it if it makes you feel more comfortable. It's not about beating the banks."
You pay nothing. Finder is free to use. And you pay the same as going direct. No markups, no hidden fees. Guaranteed.
You save time. We spend 100s of hours researching home loans so you can sort the gold from the junk faster.
You compare more. Our comparison tools bring you cheaper, better home loans from across the market.
The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our website, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.
John is the co-host of the this is money and this is property podcasts (formerly my millennial money and my millennial property). He is Director at SOLVERE Wealth, Director/Buyers Agent at Envisage Property, and is property coach of over 25 years.
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I have a current mortgage with Bendigo Bank on fixed interest rate of 2.090% which expires in July.
I want to know my options when it expires.
Small mortgage which is due to be paid off in 2029.
None of your options seem to include this issue.
Can I speak with someone?
Hi Susan,
You have a couple of options. You could:
– Stick with Bendigo Bank and either roll over onto a variable rate loan option in July, or choose another fixed rate home loan.
– Refinance to a different bank, and choose either a fixed or variable rate.
Your eligibility to refinance depends on a number of things, including your age, income and loan amount. As a first step, it might be worth contacting your bank so they can let you know what their current rates and offers are, so you have an idea of what your repayments will be from July onwards. You can then compare this to other options in the mortgage market to see if you can get a better deal elsewhere.
Hope this helps!
Useless tool – no way to select weekly payments.
Hi Chris,
We appreciate your feedback.
Our tables contain quite a bit of information in them. In the interests of brevity, we currently allow you to compare home loans by monthly payments. If you’d like to know the estimated weekly payments, you can divide these estimates by 4.3. For instance, if the monthly estimate was $3,000, once you divide it by 4.3, the weekly amount would be $697.67.
Hope this helps, and thanks again for the feedback – we’ll explore whether this functionality can be added.
Many thanks
Sarah
I’d like speak to someone about refinancing a please?
Hi Michael,
If you already have a preferred lender, you can visit their website to submit an application and/or request to speak with their home finance representative.
Alternatively, you can speak with a professional mortgage broker to get personalised advice. You can call one of the mortgage brokers found on our page to schedule an appointment or search for a mortgage broker in your area on Google.
I hope this helps!
Richard
I am an Australian citizen returning to Australia after several years abroad. I will be entering into employment with the Australian branch of my existing employer with a new employment contract (but without a probation period). Can you advise limits to home loan borrowing upon arrival. e.g. is their a qualifying period for work/residence in Australia for lenders?
Hi JDM,
Thanks for your question!
All Australian citizens are eligible to apply for a home loan. This is one of the basic requirements. Others include age, income, and other unique requirements of the lender.
As a friendly reminder, carefully review the eligibility criteria of the loan before applying to increase your chances of approval. Read up on the terms and conditions and product disclosure statement and contact the bank should you need any clarifications about the policy.
A mortgage broker is the best person to reach out to see your options for home loans. They can give you a multitude of options according to your situation. In the meantime, to give you an estimate of your monthly repayments, you can use our home loan eligibility calculator.
Hope this helped. Feel free to reach back out for further assistance.
Cheers,
Nikki
What are the options for Self employed with one year financials?
Hello Mani,
Thank you for your comment.
If you’re self-employed and is interested in a home loan, you can check low documentation (low-doc) loan which is designed to cater to applicants who are working for themselves. Please note that different lenders have different application requirements, so it’s best to check your eligibility and ensure meeting the requirements before submitting an application.
You may check our low doc home loan guide and see the tips on how to compare such loans. After comparing the products in our panel, you can click the “Go to site” button or the “Enquire now” button and discuss with the lender your eligibility.
It’ll be best to seek advise from a mortgage broker and discuss options based on your needs.
Should you wish to have real-time answers to your questions, try our chatbox on the lower right corner of our page.
Regards,
Jhezelyn