How can I find the best home loan rates to reduce the costs of buying my first home? Monzi’s here to explain with our home loan rate guide. Find out more about all the tips and tricks that you may use to cover your deposit and potentially access a competitive interest rate. We’re here to explore what you need to know. Let’s go.
Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.
Best home loan rates Australia: Monzi explores
So, you’re looking to take the giant leap into homeownership. In short, it will be the largest financial commitment that you make in your life. As a result, it’s important to take the time and do your research to arm yourself with the information that you need to know. That way, when it comes time to apply, you may be able to find the best home loan.
One significant part of this will be finding the best home loan rates. In short, lenders charge interest on what you borrow. In other words, when you make a repayment, you’ll have to pay both a principal and an interest component. With this, your interest rate will be expressed an annual percentage (e.g. 3%).
While a small interest saving may not seem like a big deal (e.g. 3.25% vs 3.5%), keep in mind that the mortgage terms can be up to 40 years. As a result, the savings over time can be significant. Given this, whenever possible, it usually pays to try and find the best home loan rate. However, there are other factors that you must consider too.
In any case, if you’re looking to find a great rate, then read on as Monzi explores home loan interest rates. Let’s get into it.
Are all home loan rates the same?
There are many different lenders out there who can offer home loans. With this, they won’t all offer the same rates. For instance, banks may offer different rates to a lender who operates exclusively online. In addition to this, lenders may offer a range of home loan products, each of which may come with their own rates.
Given this, finding the best rates may not be as easy as it sounds. As a result, you must consider what you’re looking for. The best home loan rates for a first home buyer won’t necessarily be the same as the best rates on an investment home loan. So, take the time to reflect on your situation and use this to guide your research. Before you know it, you may find the best home loan rates for you.
What are the best variable home loan rates?
If you want a loan to purchase your first house, then a variable rate home loan will likely be what you’re looking for. In short, they are the standard form that mortgages take.
Given that they are ‘variable’, your interest rate will change over the course of your loan. As a guide, these changes are based on the underlying market factors upon which your rate is best. On the one hand, if interest rates drop, then you will benefit by paying less interest. On the other hand, if rates rise, then you will pay more interest.
Finally, variable rate home loans tend to have some flexibility. For instance, you may be able to make additional payments or access a range of handy optional extras. As a result, these loans should feature heavily in your search for the best home loan rates.
What about the best fixed home loan rates?
Given that variable-rate movements can be unfavourable, you may be looking for a safer option. That’s where a fixed rate home loan could be for you.
In short, with a fixed-rate loan, your rate won’t change, regardless of the current economic conditions. As a result, you know exactly how much interest you must pay. This can be particularly beneficial at the beginning of your loan term as it may allow you to establish a reasonable budget. However, lenders typically only allow fixed rates to remain in place for between one and five years before reverting to a standard variable rate.
In any case, if you’re looking for the best fixed rates, then keep in mind that it may be higher or lower than the best variable rate, depending on the underlying economic conditions. As a result, compare your options and consider whether you prefer the certainty of a fixed rate or the flexibility of a variable rate.
Can I combine fixed and variable rates?
Split rate home loans may give you the ability to combine fixed and variable rates into one loan. With this, you can take advantage of the security that comes with a fixed rate, while also experiencing the flexibility of a variable rate. Your repayment will then be divided into two portions and the amount of interest you pay will depend on your fixed and variable rate. However, as with a fixed rate, a split facility will usually only remain in place for one to five years.
In any case, keep in mind that you may need to pay a premium for a split facility. As a result, consider this if you are trying to find the best rates and the lowest costs. Moreover, remember that you may have the choice to split your loan in any way you choose. For instance, you may allocate 80% to the fixed rate and 20% to the variable. On the other hand, you could split it 50-50.
Ultimately, it’s up to you. Approach your lender to determine if you can get a split rate loan.
Best home loan rates with an offset account
An offset account may be one feature that could make it easier for you to pay off your loan. With this, you can deposit additional money into this account like a standard bank account. From there, it will ‘offset’ your outstanding loan balance. In other words, you will only pay interest on the difference between your outstanding loan balance and your offset account balance. As a result, it may help reduce your costs.
In addition to this, the other benefit it provides is that it acts like a savings account. While some lenders may impose minimum account balances, typically, your account will come with a debit card. As a result, you can access the funds when you need. With this, it could become a useful emergency fund or could even be used as your primary transaction.
Finally, be aware that some lenders may charge fees to open and maintain an offset account. As a result, consider the costs before doing so. While additional features are great to have, don’t add them unless you will use them. Otherwise, you may be paying for nothing.
Best investment home loan rates
While many people may be looking to purchase their first home, if you’re a savvy investor and are looking to add to your property portfolio, then you may be looking for investment loans. In short, these loans are for buyers looking to purchase a home that they can rent-out rather than occupy.
As a guide, investment loans function similarly to standard home loans. However, certain requirements may vary. For instance, you may need to have a lower loan to value ratio, meaning you must pay more upfront as a deposit.
In addition to this, interest rates on these loans may be slightly higher. This is because lenders deem them to be riskier, given that if you find yourself in financial trouble, you are more like to default on this loan than on the home loan for your primary residence.
In any case, you must keep this in mind when looking for the best investment loan rates. While it may cost you a little more, an investment property may be the perfect addition to your portfolio.
Best home loan rates Melbourne
Melbourne is a beautiful, culturally-rich, popular city. Unfortunately, the downside of this is that the housing market is extremely competitive. As a result, with sky-high prices, you want to save money wherever you can. That’s why you’re looking for the best home loan rates in Melbourne.
With this, the key is to compare. Shop around, approach a range of lenders and determine what an appropriate interest rate might be. From there, narrow down your selections and consider any relevant terms or features to decide which home loan to apply for.
Finally, keep in mind that the same principles will apply whether you’re looking for the best home loan rates in Sydney, Brisbane, Perth or Adelaide. Compare your options and do what you can to reduce your loan costs in the long-run.
Can I find the best fixed home loan rates 3 years?
Yes, you may.
Many lenders may offer the option for you to fix your interest rate for periods ranging from one to five years. As a result, if you’re looking for three years worth of certainty and security, then this could be the loan option for you. After all, your rate won’t change so you know exactly how much interest you must pay.
However, just remember that applying for a loan with a fixed, 3-year period may increase your costs compared to a standard variable rate. In addition to this, it may also be more expensive than a one or two-year fixed term. So, while you may prefer three years worth of certainty, it’s worth evaluating the costs. Consider whether the savings of a shorter fixed period are worth sacrificing a year of security. Ultimately, it’s up to you to decide what you prefer.
Which bank is offering the lowest interest rate on home loans?
Unfortunately, Monzi cannot say.
We’re not affiliated with any banks or lenders offering mortgage loans. As a result, we cannot point you in the right direction when it comes to finding the lowest rates. Instead, we’re here to give you the tools so that you may go out and find the right loan yourself.
With this, take advantage of all the resources at your disposal. These days, comparison sites make it easy for you. You can find a range of suitable mortgages and compare them side-by-side based on costs and terms. However, if you would prefer professional help, then you could employ the services of a mortgage broker.
In short, mortgages brokers are there to help you at every step along the way. They will help you assemble your application and will find a range of possible loan options for you. Best of all, it typically won’t cost you a cent. Instead, they receive a fee from the lender when you agree to a loan. Find out more today with Moneysmart as they outline how to use a mortgage broker.
Can I negotiate a better home loan rate?
If you’ve been repaying your loan for a few years, then you may consider refinancing your mortgage. In short, this involves taking out a new loan, typically at a lower rate, to reduce your home loan costs. However, refinancing may also be done to access additional features or increase flexibility.
In any case, if you are looking to reduce your costs and want to refinance, approach your current lender first. At the end of the day, they don’t want to lose good customers. So, if you have a strong repayment history, then see if you can negotiate a better deal.
With this, ensure you do your research beforehand. In other words, look around and compare your current interest rate to those offered by the market. If there is a discrepancy, then you can use this to negotiate.
While you may not always be successful, you can potentially negotiate a decrease in your rate. However, if your lender isn’t willing to play ball, then you could consider refinancing.
Best home loan rates calculator
Home loan calculators and other similar online tools are all the rage these days. Not only are they quick and easy to use, but they can also provide useful guidance too. As a result, when you’re looking to see the effects of finding the best rate on your loan costs, try and find an online calculator.
With this, you typically must enter a few key loan details (e.g. rate, amount, term). From there, it will calculate estimates of your regular repayment amount and total loan costs. However, the best feature is that these calculators are adjustable. As a result, you can see how a small change in your rate (e.g. 2.75% vs 3%) would impact your total costs or repayments. That way, you can see how it would suit your budget.
Finally, keep in mind that loan calculators can only produce estimates. As a result, use them as a guide and remember that your actual costs may vary. Check out Moneysmart’s online mortgage calculator today.
Should I always try to find the best home loan rates?
Ultimately, the most significant factor in your home loan decision should be the costs. After all, you’re borrowing many hundreds of thousands of dollars, on top of which, you must pay interest. As a result, wherever possible, you should look to find the best rate.
That said, it shouldn’t be your only consideration. Instead, you must consider the features and flexibility of your loan too. For instance, offset accounts and redraw facilities can provide many benefits to help you manage your loan repayments. While you may need to pay a premium for these, in some cases, they may be worth it.
In addition to this, you must ensure that you are dealing with a reputable and trusted lender. Moreover, you will always need to confirm that the lender offers a repayment term that’s suitable for you (e.g. not too short).
Given this, while finding the best rates should often sit at the top of your priority list, don’t forget to consider other factors too. While a small interest saving here or there is a victory, additional loan features and flexibility with your repayments may make it easier for you to manage your finances.
How can I get the best home loan rates?
Compare, compare and then compare home loans some more.
While you could settle for the first loan that you find, you have no idea what else is out there. As a result, it pays to shop around. These days, comparison websites make it easy for you to compare the features and terms of a range of loans side-by-side. With this, you may be able to find the lowest rates or the loan with terms that suit you.
However, beyond this, there may be other ways to access lower rates. Firstly, if you have good credit as opposed to bad credit, then you may be offered a more competitive rate. After all, poor credit reflects an unreliable borrower, meaning lenders may charge higher rates to compensate for this risk.
In addition to this, if you can pay a large deposit and decrease your loan to value ratio, then you may qualify for certain discounts or deals. That said, this may vary between lenders.
Ultimately, there is no sure-fire way to find the best home loan rates. However, by comparing your options, you may find a deal that works for you.
Are there any ways to get help with my deposit?
As we’ve mentioned, one way that you may access lower rates is to pay a more significant home loan deposit. With this, you may qualify for certain offers or deals.
However, if you cannot do this and can’t quite reach a 20% deposit, then the good news is that there are some schemes and loan products that may help. That said, if you cannot pay an adequate deposit, consider whether purchasing a home loan is right for you.
In any case, other options include:
Low deposit home loans
As a general rule, lenders typically need you to pay a deposit of at least 20%. However, some low deposit home loans may be offered too. That said, if you do apply for one of these loans, then you may need Lenders Mortgage Insurance (LMI) which will be an additional cost on top of your loan. Alternatively, you may avoid paying LMI if you find a guarantor to co-sign your loan. In most cases, your guarantor must be a direct family member or spouse.
First Home Loan Deposit Scheme (FHLDS)
One additional option to avoid paying LMI on a low deposit loan could be to apply with the First Home Loan Deposit Scheme. Obviously, though, to be eligible, you must be a first home buyer and your income cannot exceed a certain threshold as a single or couple. In any case, with the FHLDS, the Australian Government will guarantee the difference between the deposit that you pay and the standard 20% deposit.
First Home Super Saver Scheme
Introduced by the Federal Government in the 2017-18 budget, the First Home Super Saver Scheme allows you to save cash for your home loan deposit in your super fund. As a result, you can take advantage of the concessional tax treatment of superannuation. In other words, these contributions are taxed at a lower rate than your standard income tax. Given this, the FHSS may assist you to save up your deposit faster.
What information do I need to provide to apply for a mortgage?
Lenders take considerable care when assessing home loan applications. After all, given that they may lend you hundreds of thousands of dollars, they want to be sure that you can repay it. As a result, you must provide a range of details as part of your application.
Firstly, you must verify your identity by providing documents such as your driver’s licence, passport or birth certificate.
Next, lenders require details of your income and expenses. In other words, you may need to provide recent payslips, bank statements or information regarding any other sources of income (e.g. rent payments). Moreover, you’ll always need to outline your current, on-going expenses.
Finally, you’ll need to include the details of your current assets and liabilities. While assets may cover things like vehicles or share portfolios, liabilities usually refer to outstanding debts (e.g. cash loans or credit card debt).
Your lender will assess your application based on the information you provide. If they are satisfied that loan is affordable for you and you meet all the necessary requirements, then your application may be approved. From there, you can go out and purchase your dream home.
How do I pick the right repayment term?
Home loans may come with repayment terms ranging from 15 years up to 40 years. As a result, even in the shortest case, you’ll still be locked into making repayments for a long time. In most cases, the average term will be around 25 or 30 years. However, you must aim to select a term that suits you.
If you select a repayment term that is too short, then you may find that your repayments are not manageable for your budget. On the other hand, a repayment term that’s too long may be unnecessary and may cost you more in interest.
Given this, aim to strike the right balance. Where possible, you should look to repay your home loan in a period that is efficient, yet doesn’t put undue strain on your budget. As a general rule, your repayments shouldn’t exceed 30% of your income. Consider this figure and use a home loan calculator to determine what you can afford.
Do banks or online lenders offer the best home loan rates?
In short, we cannot say with certainty.
These days, if you’re looking to apply for a home loan, you’ve got plenty of options. While in the past, you may have needed to apply with a bank, in today’s day and age, you may be able to access online home loans too.
With this, these online mortgage lenders may offer competitive rates or additional features that suit you. In other words, they may do things a little differently. Moreover, as they are online, they don’t have to cover the cost of running branches. With this, in some cases, they may offer the best home loan rates.
Ultimately, though, it’s up to you. Consider and compare a range of mortgage options. While you may prefer to apply with a bank, look into online loans too. At the end of the day, you’re trying to find the best deal. As a result, you should explore every option available to you.
Does Monzi offer the best home loan rates?
No, we don’t.
Monzi is not a lender. We don’t offer home loans, car loans or even cash loans. As a result, we cannot offer you the best rates if you’re looking to purchase a new home. Instead, we’ve done our best to supply you with a toolkit and road map that you can take with you on your journey to finding the best home loan rates.
That said, Monzi doesn’t just provide informative breakdowns. We’re a lender-finder too. In other words, we’re here to help Aussies.
If you need access to quick and easy loans from $300 to $10,000, apply with Monzi. From there, we could match you with a lender who may offer what you need. As a result, you can save the time and hassle of trying to find a lender yourself. Apply today.
Can you match me with lenders offering the best personal loan rates?
Unfortunately, Monzi cannot guarantee if you will be matched with a lender offering the lowest rates on personal loans.
At Monzi, we’re simply a lender-finder. In other words, we’re here to act as a bridge between Aussies needing fast cash loans and a network of lenders. When you apply, we do our best to connect you with an available lender who may offer the cash you need.
Given this, Monzi might make your life a little easier. Rather than going through the hassle and rigmarole of trying to find a lender, Monzi could do the work for you. However, if you are looking to find the lowest interest rate, then you may need to do your own research or compare your personal loan options.
Am I able to cover my home loan deposit with a personal loan?
Some lenders may allow you to borrow money to cover your home loan deposit. However, this may not always be an option. Moreover, it may not be a wise decision.
If you are purchasing a home via a mortgage loan, then you are making a significant financial commitment. With this, you’ll need to make on-going, monthly repayments. As a result, taking out a cash loan on top of this may leave your budget stretched thin, given the considerable costs involved (e.g. fees and interest).
At the end of the day, while owning a home may be a dream, it may not be possible for everyone. With this, you must consider your financial situation (e.g. your income and expenses) to determine if it’s a viable option for you. Sure, you could borrow money to cover your home deposit or apply for a low deposit home loan. However, you shouldn’t compromise your current financial stability to do so.
So, how do I apply?
Monzi is 100% online. As a result, our applications are too. So, if you need instant cash and just can’t wait, apply today. All you need to do is follow these easy steps:
- Decide how much you would like to borrow and select a repayment term (if applicable) using Monzi’s loan slider.
- Complete the easy online application and provide all the necessary details to ensure your application can be processed swiftly.
- Put your feet up and allow Monzi to take over. We’ll do our best to match you with an available Aussie lender in just 60 minutes.
- Check your phone because we’ll contact you with an outcome. If we connect you with a lender, then they will be in touch to begin the next stage of the process.
Note that Monzi cannot guarantee if all applications will be successful. Moreover, be aware that if you are offered a loan, then the terms (e.g. amount) may vary from what you applied for.
Apply with Monzi now
If there is one key takeaway from this article, it should be that you must compare your options. By shopping around and seeing what’s on offer, you can potentially find the best rates or the features that suit your needs. Now, it’s time for you to begin. Do your research and, if everything goes to plan, you could be on the path towards owning your first home.
Don’t have the cash to purchase a home? Need a quick personal loan instead? Monzi’s got you covered. Apply with our lender-finder service today and you may be matched with an Aussie lender in just 60 minutes. Borrow amounts from $300 to $10,000 that you may repay over terms ranging from 12 to 24 months.
Don’t waste your time trying to find a lender. Let Monzi do the work for you. Apply now.
Finally, if you’ve got any questions, contact us at firstname.lastname@example.org. We’ll do our best to get back to you quickly with a response that addresses your queries and concerns. We’d love to hear from you.
If you would like to read more on loans, why not check out our article on loan protection insurance?