The Finder Score crunches 7,000 home loans across 120+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best home loans for cashback, you can see how each home loan stacks up against other home loans with the same borrower type, rate type and repayment type. We also take into consideration the amount of cashback offered when calculating the Score so you can tell if it's really worth it.
Read the full Finder Score breakdown
You’d think it was as simple as looking at the lowest number in the table, right? Well, it can be. But there are some things to watch out for that could make your cheap home loan…not so cheap.
The starting point is to always look at the rate. The lower rate, the lower your repayments.
Some loans lure you in with a cheap attractive rate, but then you find it piles on a huge fee to apply and another fee to pay each month as well. Your cheap rate now costs you more per month than the slightly higher interest rate with no fees.
Comparison rates are normally based on loans of $150,000 so they’re not always helpful. But if the comparison rate is much higher than the actual interest rate, you can bet there are other costs driving your repayments up.
It’s all well and good getting a low interest rate but if you’re sacrificing access to features that could save you money in the long run, it’s not worth it. Take an offset account, for example. Using an offset account will mean you pay down the loan faster because it reduces the amount of interest you need to pay.
The number one factor in determining a cheaper home loan is a low interest rate.
Let's compare 2 otherwise identical home loans with slightly different interest rates.*
| Interest rate | 7.50% | 5.48% |
|---|---|---|
| Loan amount | $607,963 | $607,963 |
| Loan term | 30 years | 30 years |
| Monthly repayment | $4,251 | $3,445 |
| Monthly saving | N/A | $806 |
| Annual saving | N/A | $9,672 |
As you can see, with the lower interest rate, you save $806 a month – or $9,672 a year.
*We're using the average owner-occupier home loan size from the ABS, the average variable rate loan in Finder's database of the full market and the lowest rate currently available through Finder's partners.
Every month, we analyse the rates in our database to create a list of the market's cheapest loans.
The lowest variable interest rate in Finder’s database is 5.69%
The lowest fixed interest rate in Finder’s database is 4.99%
Interest rates can change depending on your circumstances, but as a guide, here are the cheapest home loans from the big 4.
| Bank | Cheapest Fixed Rate | Cheapest Variable Rate |
|---|---|---|
| ANZ | 5.99% | 6.54% |
| CBA | 6.04% | 6.15% |
| NAB | 5.89% | 6.79% |
| Westpac | 5.89% | 6.74% |
The cheapest rate from the big 4 (by far!) is from CBA's new digital home loan which launched in May 2024. Even so, it's still a fairly considerable difference from the lowest rate across the market.
Let's do what we do best: compare.
Say you take out a $500,000 loan over 30 years with that 6.15% rate. You'd be paying $3,047 a month in repayments.
But with May's lowest variable rate across the market of 5.69%, you'd only (ha) be paying $2,899. That's a difference of $148 a month, or $1,776 a year.
In case you're interested, your repayments would be $3,257 with NAB's lowest variable rate. That's $358 more a month than the lowest market rate and $4,296 a year!
On 24 September the official cash rate was held at:
4.35%
The lowest variable owner-occupier rate on the market is:
5.69%
Assuming the average owner occupier home loan size of $641,143 you would be making monthly repayments of:
$3,718
"I wanted to make sure I have one of the cheapest home loans on the market. So I found an online lender with a consistently low interest rate (I should know, I check rates every month). But I also made the sure the loan had an offset account. For me, being able to build up savings in the offset account speeds up my loan and cuts down my overall interest charges dramatically. This makes the loan much cheaper in the long run."
At a very basic level, the cheapest home loan is the one with the lowest rate. But every borrower has different needs. So beyond a low rate, you need to get a loan that actually helps you achieve your property goals and financial needs.
Home loans are normally taken out for 30 years. But no one wants to spend the next 30 years making those repayments, right? With most variable rate home loans you can actually make extra repayments. By paying more off your loan than the required monthly repayments, you pay off the loan early and pay less in interest.
Fixed rate loans are less likely to allow extra repayments and will probably charge a break fee if you do repay early.
Owner-occupier home loans have the cheapest rates. But they're no good if you're a property investor because you'll need an investment loan.
Most borrowers want a principal and interest loan, but for investors, an interest-only loan offers tax benefits. It’s important to understand your strategy early on. You may be someone that will start off as an owner occupier but then move out and use it for investment (if you have taken advantage of first home owner concessions, for example).
Is it worth going for the cheapest home loan if it doesn't have an offset account?! Well, that's up to you. But considering an offset account could see you paying your loan off early and therefore less in interest, it's a pretty key thing to want to include as part of your loan. An offset account is essentially a bank account attached to your mortgage. Instead of earning interest, it reduces the interest you'll pay.
Let's say you have $100,000 in your offset account and you have a $500,000 loan. You'll only pay interest on $400,000.
You still repay the same amount every month, but this just means more of your repayment goes towards the remaining loan value and not on interest. So you end up finishing the loan faster.
"If I had to credit just one thing with helping me repay my home loan in just 7 years, I'd say it was an offset account. This is a debt-busting secret weapon. You should keep every cent to your name in one of these – we're talking your savings for everything, your emergency cash stash and even your salary. You'll likely save tens of thousands of dollars and shave years off your time in debt."
Most borrowers choose 30-year loan terms. And spread out over that time, your monthly repayments are as low as possible.
If you picked a shorter loan term your monthly repayments would be higher, but you'd pay off your loan 5 years earlier, saving thousands in interest.
Let's look at 3 examples. These loans are all for the same amount borrowed, but the loan term changes:
| Loan term | 30 years | 25 years | 20 years |
|---|---|---|---|
| Interest rate | 6.00% | 6.00% | 6.00% |
| Loan amount | $600,000 | $600,000 | $600,000 |
| Monthly repayment | $3,598 | $3,866 | $4,299 |
| Total cost* | $1,295,030 | $1,159,743 | $1,031,611 |
*Total cost here refers to the amount of interest you pay over the life of the loan, plus the principal.
As you can see, a longer loan term means cheaper monthly repayments. But a shorter loan means you pay less interest in the long run, making the whole loan cheaper.
Some lenders charge multiple loan fees that can add up to hundreds of dollars. But other lenders charge basically no fees at all (you still have to pay government fees like a mortgage registration fee).
If 2 loans have identical interest rates and features, the one with fewer fees will be the cheapest home loan.
Easier said than done, of course. But saving a bigger deposit means borrowing less money. And that instantly makes your home loan cheaper.
It saves you money in other ways too:
Home loan cashback deals can help you refinance to a cheaper interest rate and get a lump sum cash payment. Compare the latest deals and check your eligibility today.
Work out how much you need to earn to buy a house in any Australian suburb.
Looking for a loan to fund a small residential property development such as a duplex or townhouse? Find out how to get the financing you need in this handy guide.
Sometimes it makes better financial sense not to pay off your home loan. Here are the considerations you should think about before making a choice.
We compile the average home loan interest rates in the market and update them monthly.
If you want to buy a block of vacant land to build a home, you may need a land loan.
Compare current bank interest rates for home loans, credit cards, personal loans, savings accounts and term deposits to find the best deal for you.
You may be able to get a low deposit home loan with just a 5% cash deposit. Here are the lenders who are more likely to lend you a 95% loan.
Learn how to compare rates to find the best home loan and start saving money on your mortgage today.
What is an offset account? It can save you thousands in interest and help you own your home sooner.
We have sold our home for $1.250 m and buying a new home for $1.650m. This leaves a deficit of $400k. We have 2 units up for sale valued at $750k that once sold, would account for the deficit.
The units have not sold and the agent said it is a ‘soft’ market.
We must settle before Sept. 5th. We cannot rely on the units that have been on the market since May 12th. We were advised to look at bridging finance on a short term . Say 6 months.
I seek your advice… Thankyou.
Hi Peter,
Sorry to hear about your situation. You can learn more about bridging loans and compare some options here. Each of these loans come with different benefits and costs. For instance, the loans.com.au bridging loan offers 3 months interest free; you can have 6 months of no repayment; choose between 6 or 12 month bridging period; however, the interest rate is higher than market rates (currently 7.75% p.a.*)
A loan like this might be suitable for you, but given your current loan will settle in a matter of weeks and you need finance urgently, it might be worth trying to find a mortgage broker who can assist you with getting urgent access to finance.
Best of luck!
I have home loans with ANZ (fixed) finishing Jan 2024.
I need to refinance. I looking for better rates
Hi Sea,
You can review a range of options and rates on this page. If you find a loan that suits and you’d like more info, you can click the green “go to site” button to get more information.
Best of luck!