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How to make your own Australian home loan comparison
A home loan is undoubtedly one of the biggest investments you make in your life, so it’s crucial you do your research and compare your options instead of just sticking with your childhood bank.
A home loan is also arguably the longest investment you will make, with most loan terms spanning 25-30 years. This means it is important to compare the long-term benefits of different home loan types and features. Choosing the right home loan for your needs and budget can save you thousands of dollars in interest charges and fees over the life of your loan.
So, how can you make your own Australian home loan comparison? By making sure you know what to look for in your best home loan, and using the right comparison tools.
Factors to compare with a home loan
There are a range of home loan factors that borrowers may want to compare to help you find your best option:
| Home loan feature | About |
| The lender | Big banks may come with greater product variety, meaning you can keep all your financial products with the same bank and under the same app. Competitive lenders, like online banks or neobanks, may offer lower interest rates, fewer fees, or greater innovation. |
| Interest rate | The higher the interest rate the greater your mortgage repayments. But some home loans with more features may come with higher rates, compared to the no-frills options.
Comparison rates are a tool that borrowers may want to use to see a more realistic view of the cost of the loan. It factors in the interest rate and most of the fees, over a 25-year, $150,000 home loan. |
| Fees | These can include upfront fees like application fees, ongoing fees like annual fees, and exit fees like break fees if you leave a fixed rate period early. |
| Features | These can include:
|
| Fixed or variable | Fixed rates lock in a home loan rate over a term (generally 1-5 years). This may be helpful for budgeting, as your repayments will stay the same throughout the fixed term. Plus it protects your repayments from market fluctuations.
Variable interest rates are subject to market fluctuation. Your bank may increase your rate immediately if the Reserve Bank of Australia were to lift the cash rate. But if interest rates were to drop, you’d also take advantage of instant mortgage repayment reductions. |
| Repayment type | Choose between paying both the principal (loan amount) and interest, or making only interest repayments with your home loan for a fixed period. |
| Loan term | A typical home loan term is 25-30 years. Some lenders may offer loan terms as high as 40 years. However, the longer your loan term, the smaller your monthly mortgage repayments may be but more interest you’ll pay over the life of the loan, and vice versa. |
How to compare home loans in Australia
RateCity provides Australian homeowners and would-be borrowers several comparison tools and access to experts to help you choose your best home loan option.
- Comparison tables
Comparison tables allow you to compare apples with apples, by filtering down loan options based on your needs and circumstances so you can view them side by side. You can then view all mortgage option interest rates, fees, monthly repayments and features to help create a short list.
- Mortgage Repayment Calculator
Now you have a short list of options, use RateCity’s Mortgage Repayment Calculator to discover which home loans may best suit your budget. The Mortgage Repayment Calculator will calculate your potential home loan repayments based on each loan option you enter.
- Real Time Ratings™
RateCity’s Australian-first rating system ranks home loan products out of five stars, based on their cost and flexibility. The Real Time Rating™ score may be another way you can use to help narrow down your mortgage shortlist and choose your best option.
- Mortgage brokers
If you’re after some expert advice, it may be worth speaking to a mortgage broker. These home loan experts can look at your finances and recommend some deals that could also suit your goals and budget. A mortgage broker should not charge you for their service, but they may earn a commission from a lender in their books upon your loan application.
Disclaimer
This article is over two years old, last updated on April 6, 2022. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
Compare home loans in Australia
Product database updated 26 Nov, 2024
