Australia's Best Home Loan Rates Comparison

The best home loan rates are generally available to owner occupiers with a low loan-to-value ratio. In other words, if you have a large deposit or a high level of equity in your home relative to the loan amount, many banks will offer a lower rate. That’s because these loans are less risky for lenders.

Investors and other borrowers perceived as presenting a greater risk to lenders are generally charged higher home loan rates.

In addition to shopping for the lowest interest rate, here are some simple tips from Money’s home loans expert and mortgage broker, Mansour Soltani, to help you shave time and money off your mortgage.

1. Switch to fortnightly repayments By making fortnightly repayments instead of monthly, you'll make the equivalent of an extra month's repayment each year without even realising it. There are 26 fortnights a year, the equivalent of 13 monthly repayments. This helps reduce your loan balance sooner and your total interest paid over the life of the loan.

2. Increase your repayments by 5-10% If your budget allows, consider making extra home loan repayments (however small). For instance, increasing your fortnightly repayments on a $600,000 loan at 6.00% interest over 30 years by just 5% (adding $115 each fortnight) could save you $100,310 in interest overall and shave three years off your home loan.

3. Use your offset account Keep your household income and savings in your offset account to reduce your interest payable. For a $600,000 home loan with a 6.00% interest rate and fortnightly repayments, having $20,000 in your offset account could shave two years off the loan's life and save $91,742 in interest.

4. Refinance every 2-3 years Consider refinancing to a lower interest rate every 2-3 years if the market allows, while also reducing your loan term by one year each time. For instance, refinancing a $600,000 home loan from a 6.00% rate on a 25-year term to a slightly lower rate of 5.80% on a 24-year term would slightly reduce your monthly repayments and save you $47,017 in interest over the life of the loan.

5. Aim to lower your LVR To get the best home loan interest rate, your LVR should be 60% or less. Every borrower should aim to lower their LVR to 60% as soon as possible. You can do this by paying down your mortgage when you can or by building the equity in your home by increasing its value.

The official cash rate has remained unchanged for more than a year now, but some lenders are starting to lower their rates in anticipation of rate cuts to come.

Most cuts have been to fixed loans and fixed rates across all terms (1-5 years) are now lower than variable rates. Even so, less than 3% of borrowers are choosing a fixed rate. It seems most people want to be on a variable rate for when the anticipated rate cuts come.

When will that be? If the economists from the major banks are to be believed, it could well be in the first half of 2025.

In the meantime, most of the growth in new home loan borrowing is being driven by first home buyers and investors, but refinancers still account for around 50% of all loans settled. Plenty of Australians are still shopping for a low rate and are switching when they find one.

The minimum eligibility requirements for a home loan include:

The home loan that’s best for you will depend entirely on your goals and circumstances, but it should ideally have the trifecta:

How much you can borrow with a home loan will depend on how much of a deposit you have (or equity in your existing property if you’re refinancing), plus your income, expenses, liabilities (including outstanding debts) and whether you have any existing assets like an investment property with equity.

To assess your borrowing capacity, lenders will consider your financial situation and credit profile.

You generally have the option to make repayments on your home loan weekly, fortnightly or monthly.

Your mortgage repayments will include a principal (what you borrowed) and interest component. There's also the option to get an interest-only home loan, where you'll only pay the interest for a set period of time.

If it's a principal and interest (P&I) loan, initially a larger portion of your repayments will go towards paying off the interest. But over time, more of your repayments will go towards reducing your principal. This is because interest is calculated daily based on your outstanding loan balance, which decreases as you repay more principal over time.

Yes, and you should! Home loan interest rates are constantly changing and if yours is no longer competitive, you should ask your lender for a discount. Particularly if you have an LVR below 60% and you are on top of your repayments, you should be in a strong position to negotiate. If your lender will not offer a discount, you can consider switching lenders to get a better rate.

Your home loan repayments will depend on your loan amount, your home loan interest rate, your loan term and how frequently you make repayments (monthly, fortnightly or weekly).

To help you understand what your repayment could be, we've compared the repayments on different loan amounts based on on loans from a wide range of lenders:

Typically, you can opt to fix your home loan rate for a period ranging from one to five years. However, some lenders, such as ANZ and RAMS, provide fixed-rate home loans for up to 10 years.

Compare fixed rate home loans for different durations:

The comparison rate on a home loan is designed to more accurately reflect the total cost of the loan per year, including interest and most fees. Lenders and mortgage brokers must advertise the comparison rate alongside a loan's interest rate.

The comparison rate can be a helpful tool for comparing loans, but it has its limitations. For example, it is always calculated on a loan size of $150,000 over a 25-year loan term, which won't be realistic for a lot of borrowers. On a fixed-rate loan, the comparison rate factors in the rate the loan reverts to once the fixed term ends, meaning it can be quite different to the rate you'll actually be paying during the fixed term.