Compare Home Loans
Compare Home Loan Interest Rates and Find Loans
Searching and comparing home loan interest rates is a great first step to getting a loan, but making sure that you’re getting the right features in your home loan can save you thousands of dollars when paying it off. You might also have some special circumstances that need to be considered when applying for a loan.
Australian Home Loan Comparison Guide
Of all the loan products you may have during your lifetime, choosing a home loan that’s right for you is probably the most important.
First of all it’s going to be the largest loan you ever take out, and it will generally be taken over the longest period of time too.
The most important reason for choosing the right home loan however, is that the loan will be secured against your property. That means if you struggle to repay the debt, or find the loan you have isn’t flexible enough to let you reduce of increase your payments when necessary, you could end up in serious bother.
In the worst possible case you could even lose your home! Unfortunately this is a reality for far too many people.
Let us guide you through what can be the very complicated task of comparing home loans, and finding the one that will be suitable for your ever changing personal situation.
Featured Home Loan
Apply for Loans.com.au – Dream Catcher Home Loan and get a low variable interest rate, plus no application fee and no additional repayment fee. Offer available for a limited time only.
- Interest Rate of 5.85%
- Comparison Rate of 6.21%
- Application Fee of $0
- Maximum LVR With LMI: 80%
- Minimum Borrowing: $50,000
- Maximum Borrowing: $750,000
How To Compare Home Loans
Before you even begin to look at any home loan offers, the very first thing you should do is to plan out a full budget on paper. This step is absolutely vital to your long term financial stability.
You need to note down on paper all your monthly earnings. If you’re a couple, this list should also include all of your partners earnings too.
If your partner doesn’t work and receives benefits then put these down as well.
The next step is to write down all your current expenses, minus your rent or current mortgage payments. Make sure you include things like motor insurance, mobile phone charges, groceries etc.
The reason you’re excluding your current rent or mortgage payments is because you won’t be paying these once you have a home loan. Now subtract all your expenses from your household income that you just worked out.
Whatever figure you’re left with gives you a rough idea of how much money you have left each month to go towards a home loan. It’s important to note that this is only a rough figure.
Depending on the type of property you buy you may have higher gas and electricity bills, you may have building insurance to consider, and if you take a very large home loan you may even have to pay mortgage insurance which will also come out of your monthly income.
Once you have a rough idea of your monthly budget you can begin looking around and comparing home loans. There are various types of home loans available, and each one has different features, benefits, and pitfalls to watch out for. Here are the main types of home loans, and the things you need to think about:
Best Home Loans Comparison
| Home Loan | Details | Interest Rate (p.a.) | Comp Rate^ (p.a.) | App Fee / Ongoing Fee | Max LVR | Min & Max Borrowing | |
|---|---|---|---|---|---|---|---|
 Loans.com.au – Dream Catcher |
A low variable rate plus no application and ongoing fee. | 5.85% | 6.21% | $0 / $375 | 80% | $50,000 / $750,000 |
 
|
 ME Bank Members Package – Eligible members with a Member Package |
A home loan offering instant access to your money and 100% mortgage offset facility. | 6.19% | 6.19% | $0 / $395 | 80% | $50,000 / $2,500,000 |
|
 Bankwest Online Home Loan |
Apply online for this exclusive Bankwest home loan. | 5.97% | 5.97% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
 Illawarra Home Loans Bank Beater Home Loan |
A low variable rate, beaten down even further by 0.05% p.a. after 5 years. | 6.07% | 6.35% | $0 / $345 | 90% | $250,000 / $1,000,000 |
|
 CUA Fixed Rate Home Loan – 3 Year Fixed Rate |
A feature home loan offering a low interest rate with no monthly account keeping fees and no fees for additional repayments. | 5.89% | 6.36% | $600 / $0 | 80% | $10,000 / $5,000,000 |
|
 UBank UHomeLoan (Variable Rate) |
One of the market leading variable interest rates. The maximum loan amount needs to be 80% of the property value. | 5.83% | 5.83% | $0 / $0 | 80% | $100,000 / $1,000,000 |
|
Loans.com.au – Dream Loan Express – Variable Home Loan (80.01% -95%) |
A home loan offer with $0 application fee and one of the lowest available home loan interest rates in the market. | 6.20% | 6.22% | $0 / $0 | 80.01% – 95% | $50,000 / $750,000 |
|
 AMP Essential Home Loan |
The AMP Essential Home Loan offers no ongoing fees and a very competitive variable rate. | 6.45% | 6.47% | $295 / $ 0 | 90% | $40,000 / $1,000,000 |
|
 Major Bank Special Offer ($500,000-$750,000) |
Apply for a special variable home loan from one of the big 4 major banks. | 6.14% | 6.49% | / | 95% | $500,000 / $750,000 |
|
 State Custodians Mortgage Company Breathe Easy Offset Loan |
Awarded Best Non Bank Basic Variable Loan of 2011 this fantastic product comes with no fees and a stack of features including unlimited redraw and free 100% interest offsetting. | 6.27% | 6.18% | $0 / $0 | 95% | $150,000 / $1,000,000 |
|
 HomeStar No Fee 100% Offset |
Enjoy no fees and zero mortgage insurance to pay. HomeStars offset loan allow flexible repayment frequency, intrerest only repayments and visa debit card and full banking functionality. | 6.26% | 6.26% | $0 / $0 | 90% | $250,000 / $750,000 |
|
State Custodians Mortgage Company Standard Variable Offset Loan |
Voted the best loan for first home buyers, this loan offers no application or ongoing fees and a stack of great features including unlimited redraw and 100% interest offsetting. | 6.02% | 6.23% | $0 / $345 | 95% | $150,000 / $1,000,000 |
|
 Super Rate Fee Saver Home Loan |
Fully featured loan offering one of the best rates on the market. Perfect for first home buyers or those looking to upgrade their existing home. Unlimited redraws, and flexible repayments. | 6.25% | $0 / $0 | 95% | $50,000 / $2,000,000 |
|
|
 Community First True Basic Home Loan |
An easy to manage loan with all the standard features available as an option. Enjoy no annual or monthly account keeping fees. | 6.59% | 6.68% | $500 / $0 | 95% | $100,000 / $1,000,000 |
|
 MyRate Advantage Rate Loan |
Zero fees, unlimited redraws and interest only repayments. One of the best all-round loans on the market, perfect for first home buyers or those looking to refinance. | 6.15% | 6.15% | $0 / $0 | 95% | $100,000 / $2,000,000 |
|
HomeStar Advantage Loan |
No upfront or annual fees offering unlimited free redraw and full banking functionality. | 6.28% | 6.28% | $0 / $0 | 95% | $150,000 / $2,000,000 |
|
Standard Home Loans
These loans make up the majority of the mortgage market, and are probably the safest bet for most consumers. With a standard home loan you borrow one chunk of money over an agreed period of time, and make regular repayments to reduce the debt.
At the end of the agreed loan term your deal ends, and it’s at that point your home is officially owned by you and not the lender.
Line Of Credit Home Loans
Line of credit loans work very differently to your standard home loan products. A line of credit home loan is not paid off in the traditional way. Instead of borrowing a lump sum of money which you then repay over the term of the loan, a line of credit is almost like a credit card with a giant credit limit.
You don’t have a set amount to repay each month, and can borrow money whenever you like, as long as you don’t go above your agreed credit limit. You can have your wages paid into this account to reduce the amount of interest you’re paying, and then use the credit to pay for purchases as you would a credit card.
Whilst it can be very useful having access to credit on tap, you should bear in mind that in the same way as an interest only home loan, at some point you are going to have to find enough money to pay the loan off.
Lo-Doc Home Loans
Another type of loan you may run into are the Lo-Doc loans. These are primarily aimed at small businesses, or those that are self-employed. They are loans that don’t require the borrower to produce much in the way of physical evidence of their earnings.
They are a much bigger risk to the lender, and for this reason you will find the interest rates on these loans are considerably higher than others.
Rent To Buy Schemes
Whilst not traditionally a home loan, these are worth mentioning.
Rent to buy home schemes are quite risky for buyers, but could be a good option for those on very low incomes, or those who are struggling to put together a deposit.
With a rent to buy scheme a prospective home buyer will rent a property from a landlord for a set period of time, with the option to buy the property once the rental term is up. Whilst you rent the property you’ll make regular over-payments to the landlord, and these go towards your deposit when your option to buy comes into force.
The danger with this kind of scheme is that if for any reason during your rental term you fail to keep to your financial obligations the landlord can end the agreement, and you will lose any over-payments made towards your deposit. You will also lose your option to buy, effectively leaving you homeless.
Although these schemes are quite risky they are worth considering as a last resort.
So now you’ve decided on the type of home loan you’re looking for, you now need to start comparing the various features, fees, and benefits of each one. Here are the main things you should be looking at.
The Interest Rate
One of the first things to look at is the interest rate of home loans you’re considering. As with all credit products the lower the interest rates, the less you have to pay back over the lifetime of the loan.
Ideally you want to choose a home loan with a very low interest rate, HOWEVER, you shouldn’t choose a loan simply because it has the lowest rate. It may not charge you much in interest, but it could have high fees instead.
The other thing to check with interest rates is the length of time the rate lasts. Some lenders will offer low rates for the first year or two of the home loan, but these rates then suddenly sky rocket for the rest of the loan term.
Make sure you’re clear on whether your interest rate is permanent, or whether it’s a special promotional deal.
Fixed Rate or Variable
Another very important aspect of the interest rate to investigate is whether it’s fixed or variable. A fixed rate home loan will have an interest rate which remains the same throughout the term of the deal.
No matter what happens to central bank rates, the amount you pay in interest will always stay the same.
A variable rate of interest will generally track the national rate of interest. In other words if the national rates of interest were to rise, then the rate on your home loan would normally follow suit. This would mean the cost of your mortgage would increase, as would your monthly repayments.
Likewise if national rates were to fall, so would the rate on your home loan. In this scenario your monthly payments will drop, thus saving you money.
Whilst a variable rate of interest gives you the opportunity to cash in when rates are down, they can also put you under immense financial strain when rates suddenly spike.
A fixed rate of interest can see you miss out on some savings, but they’ll also protect you from expensive rate increases. Many people like the security a fixed rate of interest offers, even if it means paying a little extra for it.
Standard Principal Or Interest Only?
There are normally two repayment vehicles available for you to choose from when you take out your home loan.
A standard principal repayment home loan sees you repaying both the interest and the actual principal (or balance) of the loan each month, whereas an interest only loan has you only repaying the interest. At the end of the loan term you’ll need a lump sum of money in order to repay the full principal.
The reason some consumers choose an interest only repayment option is because the amount you pay back each month is much lower than it would be with a principal repayment loan.
The problem with interest only loans is that whilst your payments may be lower in theory, you’re not actually paying any of the main loan off. This means at the end of the loan term you have to come up with a large chunk of money to settle the debt. If you don’t have enough money put aside your only option is to refinance, or sell your home.
Whilst a principal loan will cost you slightly more each month, you know that when the term of the loan is up, your home is fully paid for.
Most lenders will give you the option to have an interest only home loan for a period of time before letting you switch to a principal repayment option. Some lenders will charge for this facility so do check what each lender’s policy is in this regard.
Annual Fees
Some lenders may charge you some sort of annual fee which pays for the maintenance and administration of your account. Whilst this isn’t a particularly common feature of home loans, you should check in the terms and conditions of each loan you compare just in case.
Over-Payment Facility
Does the home loan give you the facility to make over-payments when possible?
You never know when you’re going to have a little windfall. Maybe your numbers come up on the lottery, or your boss decides to give you a healthy bonus one month. This extra money could go towards making an over-payment to your home loan.
Ideally you’re looking for a home loan that allows you to make over-payments whenever you want at no extra charge. By making over-payments when you have a little bit of extra cash you reduce the amount you have to repay in interest over the life of the loan.
Making over-payments whenever possible can also dramatically reduce the term of the loan, and in some cases could see you free of debt years earlier than planned.
Because lenders lose out if you end your loan early some will make you pay a fee each time you make an over-payment, whilst some limit the amount you can over-pay.
Can You Redraw?
In the same way as some lenders allow you to make over-payments when you have spare cash, some home loans give you the facility to borrow back some of the money you’ve already repaid during times when you need an injection of cash.
You’re normally allowed to borrow back as much money as you wish, as long as you don’t go above the amount you originally borrowed. Whilst many lenders don’t charge you for using your redraw facility, some will, so check each lenders rules and regulations.
It’s more common you’ll find lenders don’t charge you a fee to redraw as it means they make a little extra money from you in interest.
Payment Terms
How often do you have to make repayments? Some lenders will have a set procedure where you make monthly payments for the life of the loan, whilst others will let you pay monthly, bi-weekly, or weekly if that suits you better.
Weekly payments can be useful if your wages are also paid weekly and you prefer to get rid of the money straight away without the worry of spending it.
Is There An Offset Facility?
Home loans with an offset facility give you a handy way of reducing the amount of interest you pay back overall.
An offset facility involves you having a general transaction or savings account linked to your home loan, and the money that is put into this linked account goes toward reducing the amount you owe on your home loan.
In other words, the more money you have sitting in your offset account, the less you’ll have to repay in interest. It can be particularly useful to have a linked savings account as these are of course designed for you to put large sums of money into, thus giving you the most benefits.
These are the main features you need to be comparing when choosing a home loan. At this point it’s worth bringing something very important to your attention.
Banks Are Not Your Only Option
Do not assume that the big Big Four banks are your best, or only option when it comes to choosing a home loan. In many cases this couldn’t be further from the truth.
Building societies and credit unions also provide a wide range of home loan products, some of which are known to be much better value than anything you’ll find from the Big Four Banks. This is because building societies and credit unions are mutual organisations, which means they don’t have any shareholders to worry about.
No shareholders means profits go directly back into the business for the benefit of it’s customers, or members as they like you to be known.
Along with the societies and credit unions there are also some companies that only deal in home loans, and that trade completely online. These can also provide value for money as their overheads tend to be very low, and this can often be reflected in the rates you’re offered.
The main thing to remember when choosing your home loan is to not borrow more than you can safely afford to pay back. Whatever home loan you choose, one thing remains constant, and that is your home is at risk if you don’t keep up the repayments on your loan!
Only borrow what is realistic, and make sure you don’t get seduced by any short term offers, or loans with one particular stand out feature. A home loan is a long term commitment, and one you want to ensure you’re fully prepared for.
