Home loan comparison

Buying a home or looking to refinance? The table below features home loans
with some of the lowest interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

 

What is an interest-only mortgage?

Interest-only (IO) loans are home loans which delay the repayment of the borrowed amount (the ‘principal’) for a fixed term, usually three to five years. This means for a short period of time, you only have to repay the interest component of the home loan, before it reverts to both principal and interest (P&I) repayments.

Why switch to an interest-only home loan?

Interest-only home loans can be described as “less now, more later” in that your repayments for a few years will be significantly lower, but will be higher than usual once the interest-only period ends. They’re particularly attractive to investors, who can tax-deduct the interest repayments.

As an example of how interest-only loans can be cheaper now, but more expensive later, let’s look at a $400,000 home loan with a 4.00% p.a. interest rate over 30 years:

  • With a 5-year IO period, monthly repayments would be $1,333 before reverting to $2,111 for the remaining 25 years
  • With a simple P&I loan, the monthly repayments remain constant at $1,910

The IO loan will cost the borrower $313,400 in total interest, while the P&I option will cost around $287,500 - a difference of nearly $30,000.

Read here to learn more about the pros and cons of interest-only home loans.

To work out how much your repayments will be with an interest-only home loan, use an interest-only loan calculator.

Interest-only mortgage repayment calculator

Savings.com.au’s interest-only home loan calculator can allow you to compare interest-only home loans with principal and interest loans, to see how much you could save in the short-term in exchange for greater long-term expenses.

All you need to do to use to our interest-only home loan calculator is:

  • Input your desired interest rate
  • Input the loan term (length) and the interest-only term
  • Input the loan amount and the repayment frequency

You can then compare this to a different home loan, and hopefully find the right loan for you.

 

Home loan news


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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