Compare Home Loans from 5.59%

How to find the best home loan for you

Finding the best home loan for your needs doesn’t have to be a tedious exercise. In fact, tools such are our home loan comparison service can make the job easy!

Here are three steps every borrower should take when hunting for a competitive home loan:

1. Assess your financial health

The first step to finding your dream mortgage is to take stock of your financial situation.

Having a good understanding of how factors such as your income, deposit, and credit score compares to those of other borrowers can help you identify the most favourable home loan product available to you.

2. Explore the market

Once you have a grasp of your financial health, it's time to see what deals are on offer.

Many would-be borrowers spend most of their time comparing interest rates from various lenders – and no wonder why. The more competitive the interest rate on a mortgage product, the less interest a borrower will likely pay, and the more money they can keep in their pocket.

However, it's wise to look beyond just the interest rate. It's often valuable to also consider a loan's features, fees, and whether it's interest rate is fixed or variable.

3. Apply for the best deal on offer

Once you’ve completed the first two steps, all that’s left to do is to apply for your perfect mortgage.

This might involve seeking pre-approval, also known as conditional approval. Pre-approval can be particularly worthwhile if you’re still looking for your dream home as it provides confidence that you can finance its purchase once you find it.

If you’re ready to apply, check out Your Mortgage’s guide to creating the perfect home loan application.

How our home loan comparison works

At Your Mortgage, we compare home loans from over 80 lenders, including Australia’s Big Four Banks, other retail banks, non-banks, customer-owned banks, and specialist lenders.

If you have a particular home loan vision, you can also compare mortgages specifically for:

• Owner occupiers
• Investors
• First home buyers
• Refinancing
• Renovating or constructing a home
• Interest-only repayments
• Fixed or variable interest repayments

Our home loan interest rate comparison tables allow you to compare a product’s advertised interest rate, its comparison rate (a more holistic reflection of a mortgage’s true value), and your estimated minimum monthly repayments.

How to compare home loan interest rates

Comparing home loan interest rates is a simple business. The chart below shows the average interest rate offered on new home loans, as per the most recent data from the Reserve Bank of Australia.

The average interest rates for home loans in Australia varies based on the type of loan. Owner-occupier home loans typically offer lower rates, with the average interest rate for new owner-occupier loans coming in at around 6.3% p.a. in March 2024, while new investor home loans had an average rate of around 6.5% p.a..

However, the interest rate is only one piece of the puzzle. Borrowers would be wise to also keep an eye out for unexpected fees or charges.

A home loan with a low interest rate might have high fees that negate any potential savings.

That’s why it can be worthwhile to keep an eye on a mortgage product’s comparison rate. The comparison rate factors in both the interest rate on offer and any fees and charges realised over a 25-year home loan.

With all that considered, the first factor worth contemplating when comparing home loans is the type of interest rate you want: variable, fixed, or split.

Variable rate home loans

The interest rate on a variable rate home loan can rise and fall over time.

Variable rates tend to move alongside the official cash rate, which is set by the Reserve Bank. Though, lenders may make changes independently.

While variable rate home loans can offer less surety, they also generally come with more features.

A borrower with a variable rate home loan can typically make as many extra repayments as they’d like, potentially shortening the life of a mortgage and reducing the total amount of interest paid. Many variable rate home loans also offer redraw facilities and some promise offset accounts too.

Fixed rate home loan

Fixed rate home loans, on the other hand, provide greater certainty by locking in an interest rate for a fixed amount of time, typically between one and five years.

This predictability could be invaluable to borrowers who like to plan their finances over the long-term, or those who mightn’t be able to meet their repayments if their interest rate were to increase.

However, fixed rate home loans generally don’t offer as many features as their variable rate counterparts.

Split loan

Can’t decide between a fixed or variable rate home loan? A split loan could offer the perfect blend of financial stability and flexibility.

A split loan is essentially split into two pieces: one with a fixed interest rate and the other with a variable rate.

The split loan strategy might allow you to ‘hedge your bets’, taking advantage of both types of interest rates. If rates are falling, having part of your loan as variable means you get some reward from the lower rate environment. On the other hand, fixing part of your loan could benefit you if interest rates were to rise across the board.

Offset account or redraw facility?

An offset account operates in a similar to a savings account and is linked to your home loan.

However, while a savings account can provide interest, an offset account can save a borrower from paying interest. The money kept in an offset account is ‘offset’ against the amount you owe on your loan, and you won’t pay interest on that sum.

However, you need to be realistic about the benefits brought by an offset account, especially as lenders normally charge an extra fee to those who choose to have one. If the balance of your offset account is low, for instance, the costs may outweigh the benefits.

A redraw facility is a different beast entirely. Redraw facilities allow you to access any extra repayments you’ve made in the past.

By making extra repayments a person can reduce the amount of interest they incur over the life of their loan, and by having a redraw facility they don’t need to loose access to the extra funds used to pay down their loan.

Home loan fees

Most mortgage lenders charge both regular and occasional fees to borrowers.

On setting up the loan, many will charge an application fee, loan establishment fee, property valuation fee, and legal fees.

Going forward, they might charge ongoing fees, such as account keeping fees, annual fees, and fees for extra features like offset accounts.

Finally, many will also charge exit fees, such as break costs or discharge fees, if a borrower pays off their mortgage early or refinances to a different home loan product.

On top of that, a borrower with a deposit of less than 20% of their property’s value might have to pay for lenders mortgage insurance (LMI).

Each lender has a different fee structure, so it's important to compare these costs when shopping for a home loan.

Different types of mortgage products

If you're currently comparing home loans, or you've spent time doing so before, you'll likely know that the interest rate, fees, and features offered on a home loan often vary by the type of loan being considered.

Beyond variable and fixed interest rates, many lenders offer 'basic', 'standard', and 'premium' home loan options, with the latter often called a 'package'.

Here's a breakdown of some of the types of mortgages commonly available and how they typically operate:

How to choose a home loan lender

There are many lenders in the Australian mortgage space, and we compare loans from over 80 of them.

All lenders in Australia are regulated by the Australian Prudential Regulation Authority (APRA) or the Australian Securities and Investments Commission (ASIC).

With so many different lenders to choose from, we’ve broken them down into their respective categories.

The Big Four

The Big Four banks are the 'big dogs' in the Australian mortgage market and are by far the most popular among consumers.

The Big Four banks don’t typically offer the lowest home loan rates, but their mortgages usually provide convenience and lots of features.

These banks also offer a wide range of products, including savings accounts, credit cards, term deposits, car loans, and insurance.

The Big Four banks are:

• CommBank
• NAB
• ANZ
• Westpac

Other banks

There are a plethora of retail banks of various sizes offering services across Australia.

Some of these banks are owned by the Big Four banks. For example, Bank of Melbourne, St George, and BankSA are all owned by Westpac, while Commonwealth Bank owns Bankwest.

Some large retail banks that fall outside of the Big Four include:

• Bendigo Bank
• Macquarie Bank
• Bank of Queensland
• ING
• HSBC

Credit unions, building societies, and mutual banks

Credit unions, building societies, and mutual banks are all examples of customer-owned banks. They’re overarching goal is to benefit customers, as opposed to generating a profit.

Some mutual banks, building societies, and credit unions include:

• Australian Unity
• Bank Australia
• Heritage Bank
• Teachers Mutual Bank

Online banks, fintechs, neobanks, and non-bank lenders

Non-bank lenders are financial companies that aren’t Authorised Deposit Taking Institutions (ADIs) and, therefore, can’t accept deposits from customers. However, they can still offer mortgages and other types of loans.

There are also lenders who do their business entirely online or within an app (normally with phone support as well). Because these lenders have fewer overhead costs than traditional banks, they often pass savings onto customers in the form of lower interest rates and fees. Many online lenders also offer a fast and simple application process.

Some online, neobank or non-bank lenders include:

• Athena
• loans.com.au
• Unloan
• ubank

Specialist lenders

Lastly, there are specialist lenders who offer products for borrowers in unique circumstances. These may include bad credit home loans, bridging finance, or reverse mortgages.

Some specialist lenders include:

• Heartland
• La Trobe Financial

Calculators to help you choose a Home Loan

There are plenty of tools to take advantage of when comparing home loans. Here are some of the most useful tools available on Your Mortgage:

Borrowing power calculator

This tool provides you with an initial estimate of what a lender may be willing to lend you based on your income and expenditure.

Mortgage repayment calculator

With our mortgage repayment calculator, you can compare how different interest rates, loan terms, and repayment frequencies could impact the day-to-day cost of your home loan.

Split loan calculator

Using our split loan calculator could help you find how much you could be saving (or spending) in interest if you split your loan, and whether a fixed or variable interest rate would be a more suitable option for your financial circumstances and goals.