Cheap home loans – rates from 4.99%

How we calculate Home Loan Finder Scores

Read full methodology

What different scores mean

9+

Excellent

These variable rate home loans offer low costs, coupled with a host of features, giving the best overall value.

7+

Great

These home loans may have slightly higher interest rates or fewer features but overall, a competitive offering.

5+

Standard

Usually the home loans would offer above average rates. They may still include some competitive features.

0+

Basic

Higher costs and/or fewer features.

What is Finder Score?

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

• *Disclaimer

  The products compared on this page are chosen from a range of offers available to us and are not representative of all the products available in the market. There is no perfect order or perfect ranking system for the products we list on our site, so we provide you with the functionality to self-select, re-order and compare products. The initial display order is influenced by a range of factors including conversion rates, product costs and commercial arrangements, so please don't interpret the listing order as an endorsement or recommendation from us. We're happy to provide you with the tools you need to make better decisions, but we'd like you to make your own decisions and compare and assess products based on your own preferences, circumstances and needs.

How to compare the cheapest home loan rates

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.

1. Ok yes, look at the rate

The starting point is to always look at the rate. The lower rate, the lower your repayments.

2. But then look at the fees

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.

3. Then have a little glance at the comparison rate

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.

4. Don't forget to look at the features

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 lower the interest rate the lower the repayments

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.*

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.

How much can you save with a cheaper home loan?

We calculated this by using our loan repayment calculator. Try it out for yourself and see how much you could save.

What are the lowest home loan rates on the market?

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 5.38%

The lowest fixed interest rate in Finder’s database is 4.99%

The cheapest rates over time.

• How do we choose the lowest home loan rates?

  Every month, we find the lowest home loan rates in our database for 4 different loan types. To ensure these products are not overly restrictive in eligibility criteria, every loan we select must meet the following criteria:

  • Loans must be principal and interest loans with a maximum LVR of 80%, meaning you need a minimum 20% deposit.
  • Fixed rates have terms of between 1 and 5 years.
  • Mortgages are taken from Finder's database, with rates correct at the time of publication (updated every month).

What are the cheapest home loans at the big 4 in December 2024?

Interest rates can change depending on your circumstances, but as a guide, here are the cheapest home loans from the big 4.

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!

"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."

Richard Whitten

Editor

What to look for in a cheap home loan

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.

A loan you can pay off asap

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.

A loan that matches your strategy

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).

A loan with an offset account

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.

Expert insight

"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."

Nicole Pedersen-McKinnon

Freelance finance journalist

3 extra tips to help you save money on your home loan

1. Choose your loan term carefully

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:

*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.

2. Find a loan with lower fees

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.

3. Save a bigger deposit

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:

• You can avoid lenders mortgage insurance. If your deposit is at least 20% of your property's value, you can avoid the added expense of lenders mortgage insurance (LMI). Borrowers with smaller deposits usually have to pay this, which can add thousands of dollars to your loan costs.
• You can unlock lower rates. Many lenders reserve their cheapest interest rate offers for borrowers with a deposit of 20% or more.

Watch: How to find a lower home loan rate

Frequently asked questions about getting a cheap home loan

• Are introductory variable rate loans genuinely cheap home loans?

  Some of the market's cheapest home loans come in the form of special discount rate offers. These loans offer a cheap rate to entice you in but revert to a higher rate after a year or two.

  Let's be clear, there's nothing bad about these deals. A low rate is a low rate. You just need to pay attention to the interest rate once the discount period ends and refinance to a better loan if your new rate jumps up. But every borrower needs to watch their rate, as lenders do move rates up and down (or keep you on your current rate while offering cheaper home loans to new customers!).

  Also look at discharge or exit fees. You don't want to get hit with a big fee when trying to exit the loan later (although a small fee isn't so bad if the rate is very competitive).

• Are fixed or variable rate loans cheaper?

  Right now, variable rate loans are a little higher than fixed rate loans. This is a sign of the times and not always the case. If you look at the table on this page which shows the big 4 banks' lowest interest rates, you can see there's a mix.

  Read more in our guide on the difference between fixed and variable rates.

• Do online lenders have the lowest rates?

  Online lenders, fintechs and small digital banks tend to have cheaper home loan rates than bigger banks. If you're not comparing rates from these lenders, you might miss some of the best deals on the market.

  Mortgage brokers are great at helping you find a home loan and handling mortgage paperwork. But they often don't have small online lenders in their panel of lenders, so you might miss out on a very low rate.

• Do the big four have the highest rates?

  it's a myth that the Big Four always have much higher rates. It's a very competitive market. There's often not much difference between a hot online deal and a big bank's lowest variable rate.

  Many of the cheapest loans among Finder's partners (and the wider market) are from smaller banks and local credit unions. But banks are changing their rates and policies constantly, and the Big 4 can be low as well. This is why you really have to compare as many lenders as you can.

• I'm a first home buyer; is there any help out there to make my loan cheaper?

  Some lenders offer special loans tailored to first home buyers that are worth checking out. You can use our comprehensive guide to learn more about getting a loan as a first home buyer.

  And don't forget about first home buyers' grants offered by many state and territory governments.

• Can a mortgage broker find me a cheap home loan?

  Mortgage brokers compare loans for you and are experts at helping borrowers find appropriate products. If you're confused or need help, a broker can be very useful.

  But you should also know that many of the market's lowest rates (including many listed on this page) are offered by small lenders that don't appear in a mortgage broker's panel. If the lender isn't in the broker's panel, they cannot help you.

  But brokers are helpful for other reasons, and if you have more concerns than just finding the absolute lowest rate, then speaking to a mortgage broker is a good idea. Just do your own research as well.

• I want a cheap home loan, but I need to save a deposit first. How do I save that much money?

  Saving up for your home loan deposit is a serious challenge for everyone. However, there are ways to trim your expenses, build your deposit and find home loans that don't need large deposits. To master the art of saving for a home loan deposit, you should look at our in-depth, 6-part guide to home loan deposits.

• A mortgage rate I've seen looks too good to be true! How do I know if I can trust the lender?

  You should always be comfortable with the lender you're planning on going with. If you're not aware of a lender, try calling it to find out about the company and its service level before lodging an application. Speak to previous customers or read customer reviews online.

  Keep in mind that little-known lenders might be funded by a larger bank, as is the case with NAB-backed UBank or Firstmac-backed loans.com.au.

Written by

Richard Whitten

Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

Richard's expertise

Richard has written 562 Finder guides across topics including:

• Home loans
• Property
• Personal finance
• Money-saving tips