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.

Compare more home loan options

Home loan guides

9 common types of home loans

There are quite literally thousands of home loan products on the market for a range of different purposes. Having this many options can be overwhelming, leading many to rush into making a bad choice.

What is lenders mortgage insurance?

LMI is an insurance policy paid by the borrower that protects the lender against any losses they could incur if the borrower defaults on the home loan. Borrowers are exempt from paying LMI if they have a 20% deposit or more.

What is LVR?

LVR is the amount you're borrowing and is represented as a percentage of the value of the property. For example, if you have a 20% deposit, the LVR would be 80% because you are borrowing 80% of the value of the property. Calculate your LVR.

First home owners grants

If you'’'re looking to buy your first home, you should be aware of First Home Owner Grants, which exist to assist new homeowners in buying their dream home. See what grants are available in each state and territory.

Calculators

home loan repayment calculator

Mortgage repayment

how much can i borrow

Borrowing power

mortgage repayment frequency calculator

Repayment frequency

1. What is a home loan and how does it work?
2. How our mortgage comparison works
3. Choosing a home loan
4. Saving money on a home loan
5. Frequently Asked Questions


What is a home loan and how does it work?

A home loan or mortgage is a type of loan where real estate is used as the collateral. A home loan is used to finance the purchase of a home or investment property so you don't need to pay the entire amount upfront. The borrower then makes monthly repayments, with interest and principal, over a period of time usually between 25-30 years.

How our home loan comparison works

At Savings.com.au, we compare home loans from some of Australia's biggest and most notable retail banks, non-banks and customer-owned banks. Here you can compare mortgages:

With our home loan comparison tables, you can compare the advertised interest rates, the home loan comparison rate (a better reflection of the loan's true value), and what the minimum monthly repayments are based on a loan size of $400,000.

How to choose a mortgage

The interest rate is arguably the most important thing in a home loan, as a lower interest rate can save you thousands (tens of thousands even) of dollars over the course of the mortgage. While getting the lowest home loan interest rate you can is important, it isn't the be-all-end-all, as it's very possible a mortgage with a slightly higher interest rate might be more suitable to your needs.

That's why when assessing a home loan, you should also consider:

1. Does the home loan have an introductory rate?

A home loan can have a low interest rate for the first couple of years, before reverting to a higher interest rate later on.

2. If it's a fixed rate home loan, what's the break cost?

If you break a fixed home loan term, the lender can charge you a break fee which could be thousands of dollars.

3. What type of home loan fees are there?

Lenders charge you various home loan fees when you take out a home loan, from upfront fees which include establishment fees, application fees, conveyancing fees, legal fees, LMI, and government charges such as stamp duty costs. There are also ongoing fees to consider, including redraw fees, late payment fees, switching fees, annual fees, and monthly service fees. There may also be exit fees or break costs when you come to the end of your loan term.

4. Is the home loan interest-only?

Interest-only mortgages can be much cheaper for the first five years or so, but can have much higher repayments at the conclusion of the interest-only period, potentially leading to 'repayment shock'.

Each of these things can make a high-cost mortgage look deceptively low, which is why you should really look at the comparison rate to see a more accurate representation of the loan's cost. Also take into consideration the amount you're borrowing on the loan and the loan term (how long it lasts). Bear in mind that paying more than the minimum repayments can save lots of time and money off your mortgage.

How can you save money on a home loan?

To know how to save on a home loan, you need to identify where the costs are coming from. Essentially, you’ve got two main sources:

Interest rate: The ultimate money-muncher, interest makes up the majority of the home loan’s total cost.

Fees: While not as significant as interest costs, the upfront and ongoing fees of a home loan can stack up in the thousands. These home loan fees can include application fees, discharge fees, lenders mortgage insurance premiums and annual fees

Luckily, Australia’s competitive home loan market provides Aussie borrowers with ample opportunities to save on these costs by simply comparing home loans to find some of the best value deals. Whether you’re looking to save on a new home loan or an existing one, there are market-leading products available in today’s low-rate environment with comparison rates of under 4.00% p.a. Every basis point (0.01) of difference between rates could save thousands off the total cost of your home loan.

While securing a great deal on a home loan is the crucial part of the equation, there still are other things you can do to save money on your home loan, such as:

Not only can these methods reduce costs, but they may also help you pay off the loan earlier, granting you more years of debt-free freedom.

Frequently asked questions

The amount needed for a house deposit varies, but you'll usually need at least 5% of the property's value, which is an LVR (loan-to-value ratio) of 95%. To avoid paying Lenders Mortgage Insurance (LMI) most lenders will require you to provide a deposit of 20% of the property's value.

A mortgage default (missing a repayment by 90 days) won't bankrupt you but will require you to pay a late fee up to $200. This may seem relatively minor, but defaulting on your mortgage will also be recorded on your credit file, damaging your credit score.

To be eligible for a home loan, you must have:

  • A deposit (at least 5%)
  • A good credit history
  • A stable income
  • A regular savings history
  • No significant debts
  • At least two forms of identification, one of which must be photo ID
  • Bank statements and payslips
  • Council rates for any other properties you own
  • Other relevant documents, such as the First Home Owner Grant

The home loan application process can be quite lengthy but isn't too complicated. It will generally involve the following steps:

  1. Save for a deposit
  2. Find your perfect home or getting pre-approval first
  3. Gather your required documents
  4. Compare home loan providers
  5. A preliminary assessment by the lender
  6. Submit your application to the lender
  7. The lender completes a property valuation
  8. The lender approves or rejects the loan
  9. The lender sends you an offer
  10. The loan is settled and the funds are advanced to you.

Read our home buying checklist for a complete breakdown of everything you need to know.

An offset account is a transaction account linked to your home loan where the money stored in the account is ‘offset’ against your home loan debt when interest is calculated, reducing the amount of interest charged on your loan.

A redraw facility is a home loan feature that allows borrowers to withdraw extra repayments they have made on their home loan. Redraw facilities are useful if you want to reduce your loan amount as quickly as possible, while being able to access those funds at some point in the future should a financial emergency or other situation arises where you may need that money (like a renovation).

How much you can borrow for a home loan will depend on many factors such as your income, your savings history, your monthly living expenses, and any outstanding debt you may have. However, it is generally recommended that you borrow no more than 80% of the value of the property, meaning you must have at least a 20% deposit saved. Use our calculator to work out how much you can borrow.

A comparison rate helps you work out the true cost of a loan by combing the interest rate plus a number of fees and charges you can expect to pay over the life of the loan into a single percentage figure.

Equity in a home is the difference between the value of your home and how much you owe on the mortgage. For example, if your property is worth $500,000 and you still owe $300,000, your equity is $200,000. Our equity calculator can help you work out how much equity you have in your property.

If your current lender can't offer you what you need anymore, it may be time to refinance your home loan. Shop around and compare new home loans, calculate the costs of switching and consider the length of the new loan. Once you’ve found the ideal loan, apply through the lender and exit your old home loan.

Fixing your home loan can be good for those who need cash flow certainty, which is why many investors and first-time buyers choose them. If interest rates are very low, locking in that low rate before they rise can be a good idea. However, that can also backfire if interest rates drop even further, as those changes only apply to variable home loans, not fixed home loans. It can also be harder to repay a fixed loan early as you will have to pay significant break costs for terminating the fixed-rate period.

The time it takes for a lender to approve your home loan can differ from lender to lender, but it generally takes anywhere between four to six weeks. You can speed up your home loan approval by ensuring you meet all the borrowing criteria, have all your paperwork ready and correctly fill out the application form, have a good savings and credit history, and get pre-approval.

A credit rating is a numerical score that represents your trustworthiness as a borrower. The higher the score, the more trustworthy a borrower looks to a lender. Your credit score can determine how much a lender is willing to lend you for a home, what interest rate to charge you, and whether you can afford to meet your repayments.

  1. Make more frequent weekly or fortnightly repayments
  2. Make extra repayments
  3. Consider refinancing your home loan to a lower interest rate
  4. Consider an offset account
  5. Pay off the principal

Most home loan terms are between 25-30 years but a handful of lenders in Australia offer loan terms of up to 40 years.

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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): Great Southern Bank, 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.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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