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Best Home Loans

Compare mortgage offers with Savvy to help you find the very cheapest and best home loan for your individual needs.

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, updated on August 7th, 2023       

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With so many home loans on offer in Australia today, it can seem like a challenge to narrow down your options to find the best one for you. Fortunately, comparing the best home loans is simple when you do it with Savvy.

Read on to find out what home loan features are available and which ones you should take into consideration when comparing home loans.  Compare the best Australian home loans side by side with Savvy to help you make an informed choice about which loan is best for you and your family

First homebuyers

If you’re a first homebuyer, the chances are you don’t have a large deposit, so you may want to compare loans which offer the opportunity to have less than the ‘standard’ .  Some first homebuyer loans also offer very low interest rates fixed for a set number of years, before reverting to a standard variable interest rate.  These ‘introductory’ or ‘honeymoon’ loans may be your best option for the first one to five years if you don’t have a large deposit, which can help you save up more money during that period.

Other incentives for first homebuyers include cashback offers, which can assist with the cost of stamp duty or Lenders Mortgage Insurance (LMI) and loans with no application or ongoing fees.

Owner-builders

If you’re thinking of building a house, there are owner-builder mortgages available which may offer you the best home loan solution.  Construction loans are often interest-only (IO) fixed-rate loans which allow you to pay your builder in stages as building milestones are met, rather than manage a lump sum from the beginning.  These construction loans often have the best interest-only fixed mortgage rates during the construction phase, before reverting to a variable, principal and interest rate loan when building is complete.

Refinancing

The best home loan for you if you’re refinancing is likely one that offers a low interest rate plus lots of additional features to help you pay your loan off sooner.  This could either be a lower fixed or variable interest rate, or you may consider a split rate, which divides your loan into two parts: one on a fixed rate for a set number of years, and the other with a variable rate which will offer you more flexibility to pay off your loan sooner. Features may include an offset account, the ability to make unlimited additional repayments and the option to pay your loan off completely without any loan break fees.

Property investors

The best loan for property investors will depend on the state of your property and what you intend to do with it.  If it’s untenanted and you intend to renovate or redecorate before renting it out, you may want an investment property loan on which you only pay the interest portion until you start receiving rental income.  An interest-only short-term fixed rate loan may be your best option in these circumstances, as well as if you’re looking to sell within the next few years. 

If you already have tenants and wish to negatively gear your property but pay your loan off in the shortest possible time, a standard investment variable rate loan with an offset account, redraw facility and the option to make lump sum repayments may be the best option for your particular circumstances.

How do I get the best home loan interest rate?

As a general rule, you’ll be offered the best and lowest home loan interest rate if you present as a low-risk borrower.  Some of the methods you can use to show a lender that you’re a low-risk borrower include:

  • offering the largest possible deposit
  • applying with a guarantor offering security for your loan
  • presenting your application with a high credit score and a good credit history of paying bills on time
  • having stable and permanent employment

The type of property you buy and its location will also impact the interest rate you’re offered, with lenders more willing to offer lower interest rates to borrowers in metro areas who are buying properties that would be easy to re-sell.  For instance, apartments and townhouses come under the strata title ownership model, whereby the buyer owns both their individual lot and a share of the common property (such as an apartment building, driveway or garden area), often making them more difficult to sell than standalone homes.

Questions to ask yourself when deciding on the best home loan

These are some of the questions you should ask yourself when considering which is the best home loan for your needs:

  • Interest rate – is finding the lowest home loan interest rate your top priority? Or is having the convenience of a variable and flexible loan more important to you?
  • Fees and charges – is it important to you to find a loan with no or low fees? Are you prepared to pay an annual account fee in return for a lower interest rate? Always use the loan’s comparison rate when comparing home loans, as this takes into account fees
  • Additional features – which do you need? An offset account?  A redraw facility? The ability to make additional repayments to pay your loan off sooner?  No early exit fees?  Think about which features you’ll genuinely use
  • A finance package – do you want a package which may include an interest-free credit card or a fee-free transaction account? Or a house and land construction loan package if you’re thinking of building a home?
  • Signup extras – such as having LMI waived, or cashback offers? Make sure these offers are paired with a low interest rate and loan fees so you genuinely gain long-term benefits

Top tips for getting the best home loan

Try to provide a 20% deposit

The bigger your deposit, the less you need to borrow, and the less interest you’ll pay.  Lenders offer better rates to people with larger deposits. With a 20% deposit, you’ll avoid paying costly LMI.

Do your research

Choosing a home loan is one of the biggest financial decisions you’ll ever make, so ensure you do your homework and compare different mortgages to make sure you find the best home loan for your circumstances.

Don’t pay for loan features you don’t need

Although some of the loan features on offer are very attractive, carefully consider whether you really need a loan feature before paying extra for it.

Crunch your numbers

If maths is not your strong point, use Savvy’s handy range of calculators to find the answers to many of your home loan financial questions.  These can help calculate your loan repayments based on a set loan term or repayment budget.

Be realistic about what you can afford

Home loans usually take decades to pay off, so plenty can change over that time. Make sure when you’re figuring out what you can afford to repay that you leave room in your budget to cater for life’s speedbumps and unexpected expenses.

Check your credit report before applying

The better your credit rating, the more likely lenders are to offer you their best interest rate. You’re entitled to a free credit check each year, so get a copy of your credit report before you apply for your loan and make sure there are no mistakes in it.

Keep an eye out for refinancing options

The home loan market is constantly changing, so it’s a good idea to check for better deals regularly.  Refinancing to get the cheapest home loan rate, either with your existing lender or another, can save you thousands in interest over the years.

Some of your common questions about how to get the best home loan

What is a home loan comparison rate?

A comparison rate gives consumers a ‘truer’ indication of the real cost of the loan compared to the base interest rate because it takes into account the loan’s fees too.  All Australian lenders are obliged to state a loan’s comparison rate, which is the cost of the loan based on a $150,000, 25-year home loan paying principal and interest.

Is the loan with the lowest interest rate always the best home loan?

No – that’s why it’s important to compare a loan’s comparison rate and look at whether there are any loan break fees (also known as early exit fees) if you’re thinking of going for a fixed rate loan.  If you intend to refinance again in a couple of years, having no break fees may be a vital factor in your decision-making.

Who has the lowest home loan interest rates: banks or online lenders?

Online lenders tend to have lower overheads and so can offer the lowest interest rates.  The big banks have more branches to keep open and staff to pay (and also have to account for their shareholders), so their interest rates tend to be higher.

How long does it take to get a home loan approved?

That will depend on which lender you apply to for a loan.  Some online lenders are very prompt with their approval process, and you could expect to get an answer within a fortnight.  Other lenders, especially the big banks, can take up to a month or more to approve a home loan.

How long will it take if I want to refinance my home loan?

If you intend to refinance to get the lowest home loan interest rate, and you stay with the same lender, it may only take a matter of days to get your new loan approval.  As the lender already knows you as an existing customer, you won’t have to go through the whole loan application process again.  However, if you switch to a different lender, you will have to supply all of your documentation and go through a full loan application process, which may take as long as a fortnight and a month to complete.

Do loans with fewer features have the lowest home loan interest rate?

In general, you will pay more for additional loan features such as an offset account or no ongoing fees, so the lowest interest rates do tend to be very basic low interest mortgages.  However, it’s worth comparing low interest rate home loans, because some do offer helpful features plus incentives to refinance in addition to the lowest possible and best interest rate.

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