Home Loans Sydney

Compare a range of home loan offers to help you purchase your property in Sydney.

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, updated on August 7th, 2023       

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If you are planning to purchase a property in Sydney, then a home loan can likely be a huge help in bringing you closer to your goals.

In this article, we will give an overview of a few important things to consider when attempting to find your first home loan to buy a property in Sydney.

I’d like to buy in Sydney, but first, what are some things I should consider?

Due to the high cost of purchasing property in general, it will most likely be very important for you to consider every way that you can compare potential home loans in order to minimise extra costs, and to give yourself the flexibility to make your finances best work for you as you pay down your mortgage. Some important variables to compare between loans are:

Interest rates:

The interest rate on your loan determines how much you will need to pay in addition to the principal repayments on your loan and associated fees. The lower the interest rate you are offered, the less you will end up paying in the long term, meaning that typically it is in your best interest to find a loan with a lower rate.

Features:

Some loans offer additional features which might be the difference for you between choosing one lender over another. Examples of some features which you might choose to leverage are offset accounts, interest only periods, and the ability to make additional payments towards your principal in advance.

Fixed or variable interest rates:

Loans that offer a fixed interest rate allow you to ‘lock in’ a low interest rate for a period usually of 2-3 years. It can be beneficial to opt for a fixed rate loan if you predict that interest rates are likely to climb in the near term, as this means you will continue to pay a lower interest rate in a high interest rate environment for the duration of this period. On the other hand, if you believe interest rates are likely to drop, then you might wish to opt for a variable rate, and pay interest in line with fluctuations of the day.

Where should I begin in my search for a home loan in Sydney?

Home loans in Sydney are as easy to acquire as they are in any other major city around Australia or the world. As Australia’s financial centre, Sydney is home to the headquarters of almost every major bank operating in the country, ranging from Australian banks such as Westpac, Commonwealth Bank and ANZ, to international banks such as HSBC and Citibank.

For those who wish to engage a truly local business, The Bank of Sydney is an option that can be considered, as well a multitude of other smaller independent lenders.

Online comparison tools such as Savvy’s can make the decision-making process simple by offering an fast and easy way to compare home loan options between a variety of lenders, with results tailored to your specific needs.

Do you still want to know more about home loans in Sydney?

What kind of price should I expect to pay for a property in Sydney?

The price of properties in Sydney varies hugely between particular areas and property types. For example, in 2019 the median house price in Western Sydney’s Penrith was $655,000, compared to Bondi which boasted a median price over the same period of $2,392,000. Across the greater Sydney region as a whole though, the median house price for 2020 was $872,000.

Should I get pre-approved for a home loan in Sydney, and if so, how so?

Being pre-approved for a home loan can be helpful in terms of speeding up the property buying process, and giving you the peace of mind that you have access to the amount of credit that you have budgeted for. To get preapproved, you should apply for preapproval from your preferred lender, providing all of the documents necessary for the process. This will not guarantee you credit, but does lay the groundwork for a swift approval down the line.

How do these prices compare to Australia’s other state capitals, like Melbourne or Brisbane?

Sydney is Australia’s most expensive city to buy homes by a considerable measure, with Melbourne and Brisbane coming in second and third respectively. Sydney’s daunting property valuations can make the prospect of taking on a home loan seem challenging, which is why great care should be taken in ensuring that you are ready for the task.

How large should my deposit be in proportion to my home loan?

Most lenders will require a minimum deposit of 5% of the total property value, or in other words, a ‘loan to value ratio’ (LVR) of 95%. At this percentage though, most lenders will require extra fees to cover lenders’ mortgage insurance, and the borrower will incur greater interest expenses moving forwards. Saving a sizable deposit for a home in Sydney takes time and discipline, however the larger your deposit, the better you will be positioned to efficiently pay off your home loan.

Will I be eligible to receive any grants as a home buyer in Sydney?

The NSW government offers stamp duty concessions under the First Home Buyer Assistance Scheme which relieves first time home buyers of their stamp duty costs for the purchase of homes under a particular value depending on the property type. For new homes valued under $800,000 and existing homes valued under $650,000, no stamp duty needs to be paid.

Sydney property buyers will also be eligible for the federal government’s first home owner’s grant which offers those building new homes a $10,000 cash credit towards their purchase.

Is property in Sydney a good investment?

It is impossible to predict the future, however Sydney property prices on average have appreciated steadily for over fifty years now, even when discounting the effect of currency inflation on price. As a rule, freestanding homes and townhouses tend to appreciation at a higher rate then units and apartments due to the value of the land that they occupy as well as the structure itself. In some Sydney suburbs, apartments have recently experienced minor depreciation, however over all, property prices have increased over time.

Where are affordable places for me to buy in Sydney?

Relative to coastal and harbourside suburbs, or the Northern Beaches, Sydney’s far West and South-West suburbs are currently priced cheaply, however this discount comes with long commutes into the CBD, and more limited public transport infrastructure.

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