We currently don't have a partnership for that product, but we have other similar offers to choose from (how we picked these ):
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 | 7.08% | 5.69% |
|---|---|---|
| Loan amount | $641,143 | $641,143 |
| Loan term | 30 years | 30 years |
| Monthly repayment | $4,301 | $3,718 |
| Monthly saving | N/A | $583 |
| Annual saving | N/A | $6,996 |
As you can see, with the lower interest rate, you save $583 a month – or $6,996 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 variable rate.
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 | 5.74% | 6.09% |
| CBA | 6.04% | 6.15% |
| NAB | 5.89% | 6.44% |
| Westpac | 5.89% | 6.74% |
The Big 4 have joined other lenders in dropping their fixed rates, so they offer much more competitive rates than they did a few months ago. But it's important to remember you'd be locked into those rates, when it's widely predicted rates will start falling next year.
The lowest variable rates by the big 4 are from ANZ and CBA which are both from their digital loan offerings launched this year: ANZ Plus Home Loan and CBA's Digi Home Loan.
"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 the sooner you can repay the more you'll save! Most variable rate home loans allow you to make extra repayments and pay the loan early.
Fixed rate loans are less likely to allow extra repayments and will probably charge a break fee if you do repay early.
The cheapest loans are likely owner-occupier loans, but if you're buying an investment property they won't help you. You might also want an interest-only loan for the tax benefits if you're an investor.
The money you'll save by using an offset account may very well mean you end up paying less than if you went for a lower rate without an offset account. Check out our guide on offset accounts to see if it could help you.
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
Most borrowers choose 30-year loan terms.
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 where 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.
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:
Let us do the talking - we spoke to heaps of experts, brokers, banks and real humans to put 20+ hours into this guide. Our editors regularly talk to buyers, refinancers, investors and every one in-between to keep this information useful.
Rates obsessed - We track big banks, small banks, credit unions and digital banks because even 1 decimal place could save you big bucks (without getting annoying calls!).
Ready when you need it - Lending rates verified from 180+ products day and night. Whether you've remembered you need to refinance at 3am or live at an auction - our rates are up-to-date.
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.
We compile the average home loan interest rates in the market and update them monthly.
Compare the home loans from Teachers Mutual Bank for buying your first home, your next home, refinancing your existing loan or investing in property.
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.
The best investor home loan rates that have been offered in years have hit the market. Compare investment property loan rates today.
Find a great deal on a variable interest rate home loan from lenders large and small. Start comparing and saving today.
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.
Will this interest rate go up and down with the interest rate raise and fall or is it a honey moon rate which will go back up over 4% when the honey moon period finish
Hi Prem,
Thank you for your question and for contacting finder.com.au we are a financial comparison website and general information service we are not mortgage specialists so can only offer general advice.
The home loan rates will depend on its type either “variable” or “fixed” rate. If it’s “variable rate home loan” this product has an interest rate which fluctuates up or down over time as your lender sees fit. Your repayments for this type of home loan will also change if the interest rate will change.
Whilst with “fixed rate home loan”, the interest on your home loan will remain unchanged for the length of your loan term. This means that you’ll know what your repayments will be.
Cheers,
May
I was wondering where online banking institutions such as UBank and ING Direct are based and if they are required to follow Australian banking regulations/laws.
As someone who has always done business with the traditional banks I need to be sure these online banks are reliable and safe.
Hi Curious,
Thanks for your question.
Yes, UBank and ING Direct are both registered and are required to follow Australian banking regulations and laws. UBank is an online bank and a division of National Australia Bank Limited (NAB). It has the same credit licence as NAB, which means the loans are underwritten by NAB too. Deposits held within UBank are guaranteed under the Government Financial Claims Scheme and UBank adheres to the Code of Banking Practice. You may want to explore UBank home loans listed on our website.
Whilst ING Direct is wholly owned by ING Group and headquartered in Sydney. They are also regulated by the Australian Prudential Regulation Authority (APRA), like all banks. Their combined savings balances of up to $250,000 per customer are guaranteed by the Australian Government. You can also check our website if you want to compare ING home loans.
Cheers,
May
Why dont you list the money magazines best home loan winner for 2016. With loan rate of 3.35 Reduce home loans is the clear winner and not even a mention?
Hi there,
Thank you for contacting Finder.
We appreciate your feedback and will take it on board, however, we list a selection of loans on this page and it is by no means comprehensive. If you would like to find out more about how we operate, please read Finder’s terms and conditions.
With regards to the Reduce Home Loans Rate Buster home loan, it is only suitable for borrowers who have a loan-to-value ratio of under 80% or a minimum deposit of 20% as well as a loan amount below $500,000, whereas we have a range of loans to suit a large selection of customers on this page.
Thanks again for your feedback we do always like to hear from our users.
Regards
Jodie
Is U Bank part of NAB and if so why can’t NAB give me the same competitive interests rate with no fees.
Hi Ewen,
Thanks for your question. You’ve come through to finder.com.au we are an Australian financial comparison website and general information service, not actually NAB.
Yes, UBank is an online lender that is backed by NAB. Though the two offer home loan products, they differ in the interest rates for their products, where UBank offers more competitive rates and products as they don’t have physical branches like NAB. NAB is a big bank and offers a wide variety of financial products than UBank.
Hope that helps.
Cheers,
May
whilst all these low rates are enticing, I am looking for a line of credit (portfolio loan). This feature has been great but it isn’t clear when looking at other options if this is available. Could you point me in the right direction?
Regards
john
Hi John,
Thanks for the question.
You can compare line of credit loans to get an idea of the rates available for these types of loans.
I hope this helps,
Marc.