How to find the best home loan rates

SEAN CALLERY
Deputy Editor · 5 August 2021

Every month, Canstar updates the list of the top-rated home loans on its database. If you’re on the hunt for the best home loan for your situation based on interest rate, fees and features, looking at the Star Rating could be a great place to start.

Canstar also gives Awards to recognise banks and other kinds of lenders offering outstanding value overall to certain groups of borrowers, such as first home buyers and investors. Like our product Ratings, the Awards can help borrowers narrow down their options when looking for the best loan for them.

In this article:

Some of the best variable rate home loans on Canstar’s database

If you’re currently considering a home loan, the comparison table below displays some of the variable rate home loans on our database with links to lenders’ websites that are available for first home buyers. This table is sorted by Star Rating (highest to lowest), followed by comparison rate (lowest-highest). Products shown are principal and interest home loans available for a loan amount of $350K in NSW with an LVR of 80% of the property value and that offer an offset account. Before committing to a particular home loan product, check upfront with your lender and read the applicable loan documentation to confirm whether the terms of the loan meet your needs and repayment capacity. Use Canstar’s home loan selector to view a wider range of home loan products.

*Comparison rate based on loan amount of $150,000 and a term of 25 years. Read the Comparison Rate Warning

Best fixed rate home loans

If you’re looking for a top-rated loan that allows you to lock in your interest rate for a set period, the lists below show the 5-Star Rated fixed rate products on our database with the lowest comparison rates at the time of writing.

Read our Star Ratings methodology for more details on how the top-rated products were identified. The products shown are owner occupier loans based on a borrower making principal and interest repayments on a $500,000 loan with an 80% LVR.

5-Star Rated 1-year fixed home loans

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Lender Loan Interest rate Comparison rate
TicToc Home Loans Live-in Fixed P&I 1 yr 1.84% 1.90%
Pacific Mortgage Group Residential Fixed P&I 1 yr 1.89% 2.12%
Hume Bank myBlue P&I Fixed 1 yr 60-80% 1.84% 2.3%
UBank UHomeLoan Fixed P&I 1 yr 1.79% 2.32%
Reduce Home Loans Home Owners Dream 1 yr Fixed ≤80% 1.89% 2.33%

Source: www.canstar.com.au – 03/08/2021. One loan per provider displayed. Comparison rates calculated based on a $150,000 loan amount over a total loan term of 25 years.

5-Star Rated 3-year fixed home loans

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Lender Loan Interest rate Comparison rate
TicToc Home Loans Live-in Fixed P&I 3 yrs 2.14% 1.96%
Pacific Mortgage Group Residential Fixed P&I 3 yrs 2.04% 2.12%
UBank UHomeLoan Fixed P&I 3 yrs 1.95% 2.27%
Endeavour Mutual Bank/
Sydney Mutual Bank
Residential Fixed 3yrs 1.98% 2.54%
Qudos Bank Owner Occupied Fixed P&I 3 yrs 80% 1.99% 2.59%

Source: www.canstar.com.au – 03/08/2021. One loan per provider displayed. Comparison rates calculated based on a $150,000 loan amount over a total loan term of 25 years.

5-Star Rated 5-year fixed home loans

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Lender Loan Interest rate Comparison rate
Freedom Lend Freedom Fixed PI 5 yrs 80% 2.47% 2.25%
UBank UHomeLoan Fixed P&I 5 yrs 2.49% 2.42%
RACQ Bank Residential Fixed 5 yrs 2.49% 2.71%
IMB Residential Fixed P&I 5 yrs 2.49% 2.87%
BOQ Residential Fixed 5 yrs Discount Rate <80% 2.69% 3.10%

Source: www.canstar.com.au – 03/08/2021. One loan per provider displayed. Comparison rates calculated based on a $150,000 loan amount over a total loan term of 25 years.

Best variable rate home loans

If you want the added flexibility of a variable rate home loan, the list below shows the 5-Star Rated variable rate products on our database with the lowest comparison rates at the time of writing.

Read our Star Rating methodology for more details on how the top-rated products were selected. The products shown are owner occupier loans based on a borrower making principal and interest repayments on a $500,000 loan with an 80% LVR. The table is sorted by comparison rate, lowest to highest.
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Lender Loan Interest rate Comparison rate
TicToc Home Loans Live-in Variable P&I 1.89% 1.90%
Reduce Home Loans Super Saver Variable 1.88% 1.97%
Pacific Mortgage Group Variable P&I 70-90% 2.04% 2.04%
Homestar Finance Star Essentials P&I 80% 2.04% 2.07%
Athena Liberate Owner Occupier P&I 70-80% LVR 2.19% 2.08%

Source: www.canstar.com.au – 03/08/2021. One loan per provider displayed. Comparison rates calculated based on a $150,000 loan amount over a total loan term of 25 years.

Best home loans for first home buyers

While many first home buyers may look for the same things from a home loan as someone who already has a loan and is switching, there are certain features that can be of particular interest to those setting out on their property journey. In other words, the best home loan for a first home buyer may be different to the best loan for an established borrower.

For example, some first home buyers may be interested in lenders who allow them to get a home loan with a low deposit or, put another way, a high loan-to-value ratio (LVR). They may also be particularly interested in loans that allow them to make extra repayments so they can get their initially large balance down as quickly as possible to save on interest.

When assessing home loan providers as part of its annual First Home Buyer Award, Canstar considers a range of factors, including:

  • Tools and resources that help first home buyers plan for their first home, such as budgeting tools and savings accounts.
  • The application process. For example, what channels can you use to apply (in-branch, over the phone, online etc.)? What guarantee and/or deposit options does it offer to borrowers?
  • Managing your home loan. What options does the lender offer when it comes to making repayments on its home loans? Does it offer redraw or offset facilities? And, most importantly, what fees and interest rates does it charge?
  • Assistance and support offered by the lender to customers, including online and phone help and the availability of branches and mobile lenders for in-person guidance.
  • Closing your home loan and how easy and inexpensive the lender makes that process.

The lenders that won a First Home Buyer Award in 2021 based on these criteria were:

  • Bank of the Year – St.George Group, comprising BankSA, Bank of Melbourne and St.George (national winners)
  • Customer-Owned Institution of the Year – NSW & Vic: Hume Bank
  • Customer-Owned Institution of the Year – NT & SA: People’s Choice
  • Customer-Owned Institution of the Year – Qld: MOVE Bank
  • Customer-Owned Institution of the Year – WA: Great Southern Bank

Compare Home Loans

Best home loans for refinancers

If you’re considering refinancing your home loan, chances are lowering your regular repayment and overall interest costs are among the main objectives in mind. But the best home loan to help you save money over the long term isn’t necessarily the one with the lowest rate.

For example, as an established borrower you may have built up some savings since you bought your home, and having a loan with an offset account to stash that cash in could be appealing, even if it means having a slightly higher interest rate or paying a fee.

Additionally, as a refinancer, you’ll likely have a higher LVR than when you took out your loan initially. This could open up more options for you as some lenders reserve their best rates for lenders with a higher level of equity in their property.

Compare some of the top refinance rates

Best home loans for investors

Canstar’s annual Investment Home Lender Awards recognises the providers that Canstar found to offer outstanding value across their range of investment home loan products. Providers’ products are assessed on price (interest rate and fees) as well as the features offered to investment customers, such as options for repaying the loan and the availability of offset accounts and redraw facilities. There are three separate awards to recognise lenders offering outstanding value to fixed and variable investor home loan customers, as well as an overall Award.

Investment Home Lender Award – overall winners

This Award is given to providers who offer outstanding value across all investment profiles. In alphabetical order, the winners for 2021 were:

  • AMO Group
  • Greater Bank
  • HSBC
  • MOVE Bank
  • People’s Choice Credit Union
  • QBANK
  • RACQ Bank
  • TicToc Home Loans
  • UBank

Investment Variable Home Lender Award

This Award is given to outstanding value lenders across investment variable rate profiles. In alphabetical order, the winners for 2021 were:

  • Athena
  • Credit Union SA
  • Freedom Lend
  • homeloans.com.au
  • Homestar Finance
  • loans.com.au
  • Pacific Mortgage Group
  • Reduce Home Loans
  • TicToc Home Loans

Investment Fixed Home Lender Award

This Award is given to Outstanding Value lenders across investment fixed rate profiles. In alphabetical order, the winners for 2021 were:

  • Greater Bank
  • HSBC
  • MOVE Bank
  • RACQ Bank
  • Teachers Mutual Bank (Firefighters Mutual Bank, Health Professionals Bank and UniBank)
  • TicToc Home Loans
  • UBank

How to find the best home loan for you

The product that ends up being the best home loan for you overall will depend on your personal circumstances and goals. That said, in addition to considering Canstar’s Home Loan Star Rating and Awards, here are five general tips that could help you shop around for a loan with more confidence.

  • Focus on more than just the interest rate: The loan’s comparison rate, which should be advertised alongside the interest rate, is designed to give you a more accurate idea of the real cost of a loan each year, as it includes a range of fees charged by the lender in addition to the interest rate.
  • Keep an eye on features: Having access to features such as an offset account could help you save money on interest.
  • Consider flexibility: For example, if the lender allows you to make more frequent repayments (e.g. weekly or fortnightly instead of monthly) this can help you save on interest. The same goes for being able to make extra repayments without penalty.
  • Look at fixed and variable options: The best option to choose might be driven in part by how much certainty you would like over your repayments in future. Fixed loans offer greater certainty, but are generally less flexible. Or some lenders offer split home loans that combine aspects of the two loan types.
  • Shop beyond just the big banks: In many cases, the cheapest rates are offered by some of the smaller lenders.

Main image source: bmphotographer (Shutterstock)


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