What is the serviceability buffer?
The serviceability buffer is like a built-in safety net for home loans, designed to protec...
Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.06% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 STAR CUSTOMER RATINGS |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% |
| Disclosure | |||||||||||
6.14% p.a. | 6.16% p.a. | $3,043 | Principal & Interest | Variable | $0 | $350 | 60% | |||||||||||||
6.09% p.a. | 6.22% p.a. | $3,027 | Principal & Interest | Variable | $10 | $220 | 80% | |||||||||||||
6.14% p.a. | 6.19% p.a. | $3,043 | Principal & Interest | Variable | $0 | $600 | 90% | |||||||||||||
6.18% p.a. | 6.33% p.a. | $3,056 | Principal & Interest | Variable | $10 | $450 | 70% | |||||||||||||
6.14% p.a. | 6.39% p.a. | $3,043 | Principal & Interest | Variable | $248 | $350 | 70% | |||||||||||||
6.18% p.a. | 6.21% p.a. | $3,056 | Principal & Interest | Variable | $0 | $845 | 80% | |||||||||||||
6.54% p.a. | 6.86% p.a. | $3,174 | Principal & Interest | Variable | $null | $null | 80% | |||||||||||||
6.79% p.a. | 6.87% p.a. | $3,256 | Principal & Interest | Variable | $8 | $350 | 70% | |||||||||||||
7.24% p.a. | 7.24% p.a. | $3,407 | Principal & Interest | Variable | $0 | $160 | 95% | |||||||||||||
8.80% p.a. | 8.94% p.a. | $3,951 | Principal & Interest | Variable | $8 | $600 | 95% |
The interest rate landscape has shifted in recent times, with signs of the first cash rate cut still appearing on the horizon – but it may be further away than previously thought. Three of the four big banks now predict the RBA will make its first downward move in May, with CommBank now alone in predicting a February cut. Meanwhile, home loan lenders continue to slash fixed rates amid expectations rates could soon begin drifting lower.
Though, that doesn’t mean rates will tumble across the board in the new year. For that reason, it’s more important than ever for borrowers to shop around for the lowest rates available.
For that reason, it’s more important than ever for borrowers to shop around for the lowest rates available.
Here are some of the most competitive variable rate home loans available to owner-occupiers in our database at the time of writing.
Brand |
Product |
Advertised rate % per annum |
Comparison rate % per annum |
---|---|---|---|
Basics Home Loan - Special Offer - LVR ≤60% | 5.75% | 5.88% | |
The Mutual Bank | Budget Home Loan - Special offer - LVR ≤80% | 5.89% | 5.89% |
Community First Bank |
Basic Variable Home Loan - LVR ≤95% |
5.94% | 5.99% |
loans.com.au | Solar Home Loan - LVR ≤90% | 5.99% | 6.51% |
Unloan | Variable Rate Home Loan - LVR <80% | 5.99% | 5.90% |
Rates correct as of 2 December. Rates may differ to comparison table above.
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 rate for home loans in Australia varies based on the type of loan. Owner-occupier home loans typically offer lower rates, with the average variable interest rate for new owner-occupier loans coming in at around 6.3% p.a. in July 2024, while new variable investor home loans had an average rate of around 6.5% p.a.
Borrowers would also be wise to also keep an eye out for unexpected fees or charges – that’s where the comparison rate comes in handy. Unlike the interest rate, the comparison rate factors in interest, as well as the cost of fees and charges.
A home loan with a low interest rate and a high comparison rate might have costly fees that could negate any potential savings.
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.
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 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.
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 a mortgage 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.
The cheapest home loan available won't always the best choice for you. A lower interest rate might save you money, but you need to consider other factors like fees, features (such as offset accounts or redraw facilities), and flexibility too.
The best mortgage will be one aligns with your long-term financial goals. After all, you might hold it for decades, while interest rates can change over time.
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 the main factors every borrower should take into consideration when hunting for a competitive home loan:
The first step to finding your dream mortgage is to take stock of your financial situation. Having a good understanding of how your income, outgoings, and credit score compares to those of other borrowers can help you identify the most favourable home loan product available to you.
It's also important to know how much cash you can put down as a deposit and how much you're likely to spend on your property purchase. These two figures will give you an idea of what your loan-to-value ratio (LVR) might be, which will help you to select a competitive home loan and assess whether you might need to fork out for lenders mortgage insurance (LMI).
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 could expect to 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 (such as an offset account or redraw facility) and fees, as well as whether its interest rate is fixed or variable.
An offset account operates in a similar to a savings account, but it’s linked to your home loan. 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.
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.
See also: 10 ways to pay off your home loan faster
Most mortgage lenders charge both regular and occasional fees to borrowers. On setting up a loan, many borrowers face application fees, loan establishment fees, property valuation fees, and legal fees. Going forward, they might also be up for ongoing fees, such as account keeping fees, annual fees, and fees for extra features like offset accounts. Finally, many lenders will 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 LMI.
Each lender has a different fee structure, so it's important to compare these costs when shopping for a home loan.
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 based on 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:
Loan type |
Features and benefits |
Considerations |
---|---|---|
No-frills loan, typically with a comparatively low variable rate and few features. |
Restrictions and fees may apply to redraw facilities. May not suit those wanting extra features. |
|
Standard home loan |
Commonly offer redraw facilities and might provide a fixed rate option. |
Often come with a higher interest rate or more fees than a basic loan. |
Standard loan with additional features, such as offset accounts , interest rate discounts, or other benefits (like a fee-free credit card). |
Annual fee normally applies. |
|
Allows a borrower to switch from one home loan to another, potentially with better terms. |
Exit fees or break costs might apply for refinancing. It's important to weigh the cost of refinancing against any savings. |
|
Lower repayments during the interest only period, which typically lasts between one and five years. |
A home loan's principal balance will stay the same during the interest only period, and repayments can increase significantly when it ends. |
|
Tailored for property investors, often offering features like interest only repayments, which can maximum tax benefits. |
Interest rates are typically higher than on owner-occupier loans and eligibility criteria is generally stricter. |
|
For energy-efficient homes or renovations. Often offers lower interest rates for borrowers investing in sustainable upgrades. |
Limited availability and specific eligibility criteria. Features and terms vary between lenders. |
|
Helps to fund the transition between buying and selling properties. Can be a single loan using both properties as security or a separate loan for the new property. |
Bridging period is usually six months to a year. If the existing property isn't sold within the bridging period, a seller might be forced to accept a lower price. Could result in a larger debt to repay. |
|
For those building a new house or undergoing substantial renovations. Funds can be withdrawn in stages and interest is only charged on funds withdrawn. |
Typically requires a plan, permits, and a fixed-price building contract. |
|
Allows homeowners to access equity in their home without selling. |
The loan amount and interest compound over time, reducing the equity in your home. |
|
Requires less documentation than a traditional home loan. Can be helpful for self-employed individuals or those without regular proof of income. |
Often comes with higher interest rates, more fees, and stricter lending conditions due to the perceived higher risk of default. |
|
Allows a Self-Managed Super Fund (SMSF) to borrow money to invest in residential or commercial property. |
Complex loan structure and strict regulations. If the property investment underperforms, it could negatively impact retirement savings. |
To weigh up more home loan varieties, check out our guide on the different mortgages available on the market.
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 banks are the 'big dogs' in the Australian mortgage market and are by far the most popular among borrowers. They 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:
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 CommBank owns Bankwest.
Some large retail banks that aren't part of the Big Four include:
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:
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. 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.
Some online, neobank, or non-bank lenders include:
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:
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:
Our home loan interest rate comparison tables allow you to compare a product's advertised interest rate (a more holistic reflection of a mortgage's true value) and your estimated minimum monthly repayments.
Not sure which type of loan is best for your needs?
Your Mortgage can help you find out.