Finding the cheapest home loan in Australia depends on factors like interest rates, fees, and loan features. Here’s a breakdown of some affordable options available:
The Cheapest Home Loan in Australia
Table of Contents
1. Green Home Loan (Package)
| Feature | Details |
|---|---|
| Interest Rate | 5.85% p.a. (variable) |
| Comparison Rate | 5.85% p.a. |
| Key Features | Discounts for environmentally friendly homes. |
2. Fixed Home Loan – Three Years
| Feature | Details |
|---|---|
| Interest Rate | 5.49% p.a. (fixed) |
| Comparison Rate | 6.24% p.a. |
| Key Features | Loans available up to 95% LVR with LMI. |
3. Basics Home Loan – Owner Occupied (60% LVR)
| Feature | Details |
|---|---|
| Interest Rate | 5.75% p.a. (variable) |
| Comparison Rate | 5.88% p.a. |
| Key Features | For borrowers with a 60% Loan-to-Value Ratio. |
4. Smart Home Loan – Variable Rate
| Feature | Details |
|---|---|
| Interest Rate | 5.54% p.a. (variable) |
| Comparison Rate | 5.56% p.a. |
| Key Features | No ongoing fees, unlimited extra repayments. |
5. UHomeLoan – Low Rate
| Feature | Details |
|---|---|
| Interest Rate | 5.35% p.a. (variable) |
| Comparison Rate | 5.35% p.a. |
| Key Features | No application or ongoing fees. Online service. |
Comparison Table for Cheapest Home Loans in Australia
| Loan Name | Interest Rate (%) | Comparison Rate (%) | Key Features |
|---|---|---|---|
| Green Home Loan (Package) | 5.85 | 5.85 | Environmentally friendly discounts. |
| Fixed Home Loan – 3 Years | 5.49 | 6.24 | High LVR up to 95% with LMI. |
| Basics Home Loan (60% LVR) | 5.75 | 5.88 | Low LVR requirements for better rates. |
| Smart Home Loan (Variable Rate) | 5.54 | 5.56 | No ongoing fees, extra repayments allowed. |
| UHomeLoan – Low Rate | 5.35 | 5.35 | No application fees, online service. |
Factors to Consider When Choosing a Home Loan
- Interest Rates – Compare both fixed and variable rates.
- Fees and Charges – Look for loans with low or no upfront and ongoing fees.
- Flexibility – Features like offset accounts and redraw facilities can save interest.
- Loan Term – Shorter terms reduce interest paid but may require higher monthly repayments.
- Deposit Requirements – Many lenders accept 5% deposits, but 20% deposits avoid Lender’s Mortgage Insurance (LMI).
FAQs About the Cheapest Home Loan in Australia
Q1. What is the lowest home loan interest rate available?
Currently, some variable home loans offer rates starting from 5.35% p.a., depending on eligibility.
Q2. Is a fixed or variable rate better for cheap home loans?
- Fixed rates offer stability but less flexibility.
- Variable rates can be cheaper but may increase over time.
Q3. What are offset accounts, and do they save money?
An offset account reduces the interest charged on your loan by offsetting your savings against the loan balance.
Q4. How much deposit is required to secure a low-rate home loan?
Most lenders prefer at least 20% deposit to avoid LMI, though some approve loans with 5% deposit.
Q5. Can I refinance to get a cheaper home loan?
Yes, refinancing allows borrowers to switch to loans with lower rates, saving on interest costs.
Q6. Are online lenders cheaper than traditional banks?
Online lenders often have lower fees and competitive rates but may lack physical branch support.
Q7. What is a comparison rate, and why is it important?
A comparison rate includes the interest rate and fees, giving a clearer picture of the loan’s total cost.
Final Thoughts
Finding the cheapest home loan requires comparing interest rates, fees, and features. Low-cost lenders often provide online services, while traditional banks offer more personalized support. Evaluate your financial needs and explore pre-approval options before making a decision.