Home Loan Comparison – Get The Right Loan For Your Dream Home

A home loan comparison may help you find the right loan. Assess the costs, terms and features to determine which option is best for you. Monzi breaks down home loans and what you may need to consider. Read on to learn more with Monzi’s comprehensive home loan comparison guide now.

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.

Home loan comparison: why is it important?

Purchasing a home is the single greatest financial commitment that you will make in your lifetime. As a result, you must ensure that you get the best deal possible. Not only can this potentially reduce your costs, but it may also make repaying your mortgage loan more manageable too.

With this, home loan comparisons will typically involve you sitting down and assessing the key features of different home loans. As a guide, you’ll usually need to consider the costs, the features, the terms and the lender to decide which one fits your needs and objectives. From there, you can apply and potentially access the funds you need to buy the home of your dreams.

While that covers why you need to compare home loans, you also need to know how to do it. Read on as Monzi breaks down how you might conduct a home loan comparison today. Let’s go.

What should I compare?

So, you’re looking to conduct a home loan comparison. That’s great to hear. Comparing home loans is a vital first step on your path to purchasing a home. Moreover, this doesn’t just apply to home loans either. You should compare credit cards, car loans, personal loans and any other credit product that you apply for. After all, when you borrow money via a loan, you must repay it with interest. As a result, you want to minimise your costs whenever possible.

In any case, to help you get started, you could check out Moneysmart’s guide to choosing a home loan. Alternatively, you could see below for Monzi’s guide of the loan features that you must compare when you’re looking for a home loan.

Costs

Arguably the most important feature to compare will be the costs. If you are approved for a home loan, then you must repay any money that you borrow. With this, lenders will charge fees and interest. As a result, the amount you repay will exceed the principal amount that you borrow.

So, first ensure you compare the interest rate. While a small difference may not seem like much, on a $500,000 loan over 30 years, those savings may be considerable. In addition to this, where possible, aim to find the loan with the fewest fees. As a guide, lenders may charge the following fees:

  • Application fees
  • Valuation fees
  • Monthly/annual account fees
  • Late payment fees
  • Early exit fees (if you refinance with a different lender)

Note that lenders may charge other fees not listed above.

Terms

How long will you have to repay your loan? Generally speaking, you want to select a term that allows you to repay your loan in the quickest time possible without compromising your budget. A term that is too short may leave your budget stretched thin, while a term that’s too long may be unnecessary and could increase your interest costs.

As a guide, mortgage repayment terms may range from just 15 years up to 40 years. So, consider your circumstances and compare lenders to ensure that there is a term that suits your budget.

Extra features

Some lenders may offer a range of additional features on your loan. As a guide, common features may include offset accounts or redraw facilities. Moreover, you may even have the option to split your loan into a fixed and variable portion. In any case, you typically must pay a premium for these features. So, compare your options and determine which features you would use. Ensure you don’t pay for any features you deem unnecessary.

Lenders

Not all lenders are created equally. While in the past, banks traditionally offered the majority of home loans. These days, you’ve got more choice. So, take the time to explore your options. For instance, while you may look at a number of banks, check out some online mortgage lenders too. Limiting yourself to only a few lenders may mean that you miss out on a great deal elsewhere.

What is a home loan comparison rate?

When you’re looking to compare loan charges and potential costs, the comparison rate is usually the easiest way to do this. In short, a comparison rate is listed as a percentage and represents your total annual costs by combining your interest rate and any additional fees. As a result, it makes it easy to compare loans side-by-side, based on their costs.

With this, it’s important to note that, by law, lenders must list the comparison rate of any loans that they advertise. Moreover, comparison rates may reveal significant differences in the costs of home loans. However, simply basing your choice on the lowest costs may not always be the best way to go. After all, some loans could be slightly more costly but may offer certain features and extras that make it more manageable to repay your loan.

Fixed rate home loan comparison

Your home loan interest rate will usually take one of three forms. While we will explain each one, let’s begin with fixed rates. In short, with a fixed rate home loan, your interest rate is locked in for a defined period. Typically, this period will range from one to five years. However, once the period elapses, your rate will then revert to a standard variable structure.

The key benefit of a fixed rate is that you know exactly how much you pay. As a result, it can make budgeting easier when you initially take out your loan. That said, a fixed-rate loan is often less flexible than it’s alternatives. In other words, you may not have the option to make additional repayment or access extra features.

If you are after a fixed rate, then you will need to find lenders who offer this option. Moreover, note that you may need to pay a premium for the option to fix your interest rate. With this, the longer your duration (e.g. five years vs one year), the more it may cost. That said, if you value security and certainty, then that may be a price you’re willing to pay.

Variable rate home loan comparison

The second interest rate option you may choose from is a variable rate home loan. As the name suggests, your interest rate will change periodically based on a range of underlying factors. Given this, changes may either be positive or negative for you.

On the one hand, if rates increase, then you will pay more interest. On the other hand, if rates decrease, then you will pay less interest. While this may make these loans seem riskier than a fixed rate, they usually come with greater flexibility. For instance, you may have the option to make additional repayments or open an offset account.

Ultimately, a variable rate structure is the standard form that a mortgage loan will take. With this, ensure you keep a watchful eye on your interest rates. Moreover, when you apply, try to find a competitive interest rate that may reduce your costs.

Split rate home loan comparison

The final option may be a split rate home loan. In short, this allows you to divide your loan into two portions. On one, you will pay a fixed rate. On the other, you’ll pay a variable rate. As a result, the benefit of this is that you may experience both the certainty that comes with a fixed rate and the flexibility of a variable rate.

When it comes to a split facility, lenders may allow you to divide your loan however you like. In other words, you could split it 50-50, 80-20 or 70-30 depending on what you prefer. However, as with a fixed-rate loan, a split facility will usually only remain in place for one to five years. Moreover, you may need to pay a premium to access this.

So, which one is the best?

That’s for you to decide. While we’ve tried to outline each option clearly to give you a good understanding of the pros and cons, you’ll have to choose what you value.

On the one hand, a fixed rate provides certainty, given that you know exactly what your repayments will be and how much interest will be charged. However, it comes with the downside that you may be unable to access any additional features.

On the other hand, variable rates are more flexible and give you the option to make additional payments or take advantage of extra features. However, if rates rise, then your interest charges will too.

Finally, if you want the best of both worlds, then a split rate home loan could be for you. However, while you will experience some of the benefits provided by each, you won’t get the full benefits of either.

All in all, though, remember that a split facility or fixed rates will usually only remain in place for a period of between one and five years before reverting to a variable structure. While they do provide advantages, you may also have to pay for these options.

Home loan refinancing comparison

If you are repaying your loan and you feel that you aren’t getting a great deal, then you may be able to refinance. In short, home loan refinancing involves taking out a new mortgage to repay your existing one. In most cases, this will be done to access better home loan rates or additional features not available on your existing loan.

However, before refinancing, ensure you do your research to find out what a reasonable rate may be. If your current rate is higher than that, approach your lender to see if they may lower it. If they do not, then you can begin to look elsewhere. That said, consult your loan contract to determine what costs may be associated with breaking your loan.

Ultimately, just because you take out a loan, doesn’t always mean you’re stuck with it. Refinancing may help you access a better deal. Do your research to find out what other lenders may offer.

Home loan deposit comparisons

In Australia, you must pay a home loan deposit. In short, this is a lump sum amount paid upfront that is calculated as a percentage of your total property value. Typically, lenders require a deposit of 20%, meaning you have a loan to value ratio (LVR) of 80%. However, some low deposit home loans may be offered too.

If you cannot pay a large deposit and your LVR exceeds 80%, then you typically must pay Lenders Mortgage Insurance. This is an additional cost added to protect your lender in the event that you default on your loan. Alternatively, you may ask a guarantor to co-sign your loan or access the Federal Government’s First Home Loan Deposit Scheme.

In any case, compare your options and consider what’s right for your circumstances. While lenders usually prefer large deposits, given that it reduces their risk, some low deposit options are available too.

Which lender offers the best home loans?

At Monzi, we are not associated with mortgage lenders, banks or any other credit provider who offer home loans. As a result, we cannot say which is the best.

In addition to this, it’s unlikely that one loan will be considered the best in all situations. After all, the best loan for you may not be the best loan for another borrower. For instance, you may prefer a fixed rate home loan. On the other hand, someone else may be seeking flexibility and a host of additional features.

If you are in doubt, consider approaching a mortgage broker. They can potentially assist you with your application and find suitable mortgages for your circumstances. Alternatively, check out one of the many comparison websites online that may allow you to compare home loan options side-by-side.

Can a home loan comparison calculator help me?

Yes.

If you’re stuck deciding between two loans, then a home loan comparison calculator may come to rescue. In short, these calculators will operate similarly to loan repayment calculators or borrowing power calculators.

With this, all you need to do is enter the key details of the two loans (e.g. interest rate, term, amount, etc.). From there, the calculator will then provide a comparison of the costs. For instance, it may tell you how much you may save by selecting Option 1 rather than Option 2.

However, keep in mind that these calculators provide estimates. In other words, you should only use them as a guide to get an idea of what your costs may be.

Aerial picture of home loan comparison

Should I use a mortgage broker?

If the home loan application process seems a little daunting, it may be best for you to approach a mortgage broker.

Put simply, a mortgage broker acts as a bridge between you and a mortgage lender. In other words, they will usually assist you in determining how much you can borrow and may guide you through your application. In addition to this, they will usually find suitable loan options for you and will talk you through each one.

Given this, a mortgage broker may take away much of the stress associated with home loan comparisons. Not only that, but they often do not charge you either. Instead, they earn a fee from a lender if you are approved for a home loan.

For more information, Moneysmart has provided a handy breakdown covering how you could use a mortgage broker. Check it out today.

What information do I need to provide when I apply?

Lenders don’t take home loan applications lightly. After all, if they’re potentially going to allow you to borrow upwards of $100,000, then they want to ensure that you can repay it. As a result, lenders will always conduct a thorough assessment to determine your outcome. With this, you’ll need to provide some key details.

Firstly, you must verify your identity. As a result, you may need to provide documents such as your passport, licence, birth certificate or other similar articles.

Next, you must outline your current income and expenses. With this, you may need to provide bank statements dating back three months and proof of employment as well as details of any other income you receive. Moreover, you’ll need to outline your current regular expenses too (e.g. rent, food, etc.).

Finally, you must provide information regarding any assets or liabilities. As a guide, assets may include share portfolios, cars, property or anything else that you own that has value. On the other hand, liabilities usually refer to any outstanding debts. For instance, maybe you have credit card debt or are you paying off a personal loan. Either way, you must tell your lender.

Based on the information that you provide, your lender will conduct an assessment and provide you with an outcome.

Should I just settle for the first home loan that I find?

No!

The purpose of this article is to outline why you need to compare your options. While it may be easier to pick a lender and apply straight away, it will likely only cost you money. Moreover, it may limit the flexibility that you have with your repayments.

To make this clearer, if you simply settle for the first loan that you find, then you have no idea what else is out there. For instance, a different lender may offer a similar loan but with rates that are lower or with extra features such as an offset account. While a small interest saving may not seem like a big deal, over a 30-year term, this could potentially save you thousands.

So, don’t settle and don’t be lazy. If you need a home loan, take the necessary time and care to find a loan that is best for you. You should never apply on a whim or without giving proper thought to the pros and cons.

What costs come with buying a house?

While we’ve mentioned the fact that you must pay a deposit, there are many other costs that you’ll encounter if you purchase a home. By some estimates, these costs may exceed $10,000. As a result, it’s important not to spend all your money on your deposit. Instead, you must keep a little bit locked away to cover the many hidden costs of buying a home.

To give you an idea, common fees and costs that you may not have considered yet include:

  • Conveyancing and legal fees
  • Moving costs
  • Renovations and upgrades
  • Application fees
  • Stamp duty
  • Mortgage registration fees
  • Transfer fees
  • Valuations
  • Pest inspections
  • Lender’s mortgage insurance (if you cannot pay an adequate deposit)

Note that there may be additional costs that are not listed above. This is simply a list designed to provide insight into the hidden costs you may run into when you buy a home.

Can I get home loans online?

Yes.

As we’ve already touched on, banks are no longer your only source of home financing. Instead, there are now many credit providers who may be able to offer online home loans too.

With this, these online lenders can often offer great deals. As they are based online, they don’t have to pay the overheads associated with running branches. As a result, they may offer more competitive rates. Moreover, they are often innovative and can offer a host of additional features too. That said, do your research to determine your options.

Ultimately, while online lenders may be able to offer favourable terms, shop around. Compare online lenders, banks and other credit providers to find the best loan for you. If you find a great loan online, then that’s great. If you don’t, then that’s OK too. Choose a lender that suits you.

Can Monzi help me with home loan comparisons?

At Monzi, we’re not lenders. That includes personal loans, car loans and mortgage loans. Moreover, we cannot provide specific financial advice either. Instead, we’ve done our best to give you an outline of how you may go about comparing home loans. As a result, you can now take this information and apply it to your financial situation.

Beyond this, what Monzi may offer is a quick and easy lender-finder service. In other words, if you need quick cash loans from $300 to $10,000 when your budget is stretched thin, then apply with Monzi. We may be able to match you with an Aussie credit provider in just 60 minutes. As a result, you may avoid the stress and hassle of trying to pick a lender.

Scroll up to Monzi’s loan slider or hit “Apply Now.” We’d love to hear from you.

Can I use a cash loan for my home loan deposit?

Yes, in some cases, you may.

However, before doing so, consider the fact that taking out a home loan is already a significant financial commitment. As a result, taking out an additional cash loan to fund your mortgage may not be the savviest financial strategy, given that you will then be required to repay two loans simultaneously.

In addition to this, if you do borrow money to fund your deposit, then this may impact your borrowing power. In other words, lenders may limit the amount that you can borrow. After all, lenders prefer to work with borrowers who can pay a large deposit upfront, given that it reduces their risk.

At the end of the day, buying a home may not be possible for everyone. While you could potentially access a loan for your deposit, consider what you can afford to repay and if buying a home is a realistic option for you. If you are unsure, consider seeking advice from a qualified mortgage professional.

How can I apply for a cash loan with Monzi?

Applying with Monzi is easy. However, before we get to that, you must check the following boxes to confirm that you are eligible:

  • Australian citizen or permanent resident.
  • 18 years of age or older.
  • Can provide a contact number and email address.
  • Have an online bank, where your income is deposited, with at least three months of history.

Now that we’ve covered that, we can move onto applying. To get started with Monzi, just follow these easy steps:

  1. Select your preferred loan (e.g. loan amount and repayment term).
  2. Follow the prompts and provide the necessary personal and financial details to complete Monzi’s online application form.
  3. Let Monzi take over and we will attempt to match you with an available lender from our network.
  4. You’ll receive an outcome. If we successfully find a lender for you, then they will be in touch to begin the next steps.

Note that the lenders we work with cannot offer guaranteed approval loans. Instead, lenders will assess your application to determine your outcome.

Should I take out a personal loan or home loan?

Realistically, the answer should be fairly straightforward.

On the one hand, if you’ve found your dream home and want to buy it, then you will be looking for a home loan. As a result, you must do your research to find lenders or banks who may offer these products.

On the other hand, if you are short on cash but have an expense that must be addressed, then you may consider applying for a personal loan online. With this, Monzi may be able to assist. Apply with our lender-finder and you may be matched with a lender in 60 minutes. Quick, easy and hassle-free. Monzi could help you access the cash you need today.

Get in touch

If you’ve got questions about Monzi’s lender-finder, then we’d love to hear from you. Contact us today at hello@monzi.com.au and we’ll do our best to get back to you with a prompt and helpful reply. However, just remember that we only monitor this account during business hours. So, if you’re after a fast response, then this will usually be the best time to contact us.

In addition to this, keep in mind that Monzi is not a lender. Moreover, we cannot offer home loans. As a result, if you have any questions regarding loans that you may be offered, you may need to contact a lender directly.

Monzi and home loan comparisons

At Monzi, we’ve outlined how you may begin to compare home loans. Now, it’s up to you to get out there and do it. While you may want to move into your new house pronto, you must be patient. Take the time and assess your options to find a loan that you can afford and that will be suitable for your circumstances. That way, you may avoid any stress down the line.

In any case, if a home loan isn’t what you need today, but you’re looking to apply for a fast cash loan, then why not give Monzi a try. Apply with our lender-finder service now. You may be able to access cash amounts from $300 to $10,000. We could match you with a lender in just 60 minutes. Apply now.

Don’t need a loan at the moment? You can follow Monzi on Facebook, Instagram, Twitter and Pinterest for all our latest updates. We’re always happy to make new friends.

Factor In

Costs

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You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000

Terms

12 months

Costs

20% upfront establishment fee

+ 4% monthly fee

Example

Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate

Loan amount

$2,001 - $4,600

Terms

13 months

24 months

Costs

48% annual percantage rate

67.41% comparison rate p.a.

Example

Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principal Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Interest Rate for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.

Loan amount

$5,000 - $10,000

Terms

13 months

24 months

Costs

21.24% annual percantage rate

48% comparison rate p.a.

Example

Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principal Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Interest Rate for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Click here to see a worked example.