Home loan Tips with Money Matchmaker®

3 Tips To Find a Low-Interest Home Loan

Written by

Shaun McGowan

Whether you’re taking on a home loan as a first-home buyer or purchasing an investment property, finding a low-interest home loan is always one of your biggest concerns.

Your home loan interest rate is the interest charged on the money borrowed from your lender, expressed as a percentage of the total loan amount and included in loan repayments.

The difference between a low-rate home loan and a higher rate could be thousands of dollars over the lifetime of your loan.

Here we’ll give you our top 3 tips to help you find the best home loans available.

1. Ask for help - Use a mortgage broker

If you want to find the lowest home loan interest rates, you’ll need to take the time to compare as many home loans as you can, and from several providers.

The first way to do this requires the least amount of personal research - get help from a mortgage broker, a financial professional who understands your situation and finds a selection of suitable loans to choose from.

Mortgage brokers are experts in understanding both the application process and the loan structures themselves. They’ll act on your behalf to complete your application, ensure it will meet lender approval, and advise on your decision.

Mortgage brokers can:

  • Access rates unavailable on the open market
  • Find the loan most suitable for your needs from their available loans
  • Complete your application to meet lender approval criteria

Most mortgage brokers will only get paid by commission - essentially they don’t get paid unless they make you happy. The downside to this is that some mortgage brokers may only recommend certain products from their “chosen” pool of lenders.

While you won’t need to do as much research into the home loans themselves with this option, you will need to take the time to find a reputable broker you can trust.

Home loan mortgage broker

2. Do it yourself - compare lenders

If this isn’t your first rodeo, or you have the time to do it yourself, you can always bypass a broker and simply compare lenders and home loan offers yourself.

You’ll need to:

  • Find the available lenders you can apply with
  • Visit each lender’s website
  • Review their rates and fees
  • Review their home loan conditions
  • Compare these with the other available options

If you’re just looking at home loan interest rates, the most important aspect will be understanding the difference between the types of rates on offer.

The two main types of interest rates offered by lenders are fixed and variable rates.

You’ll also need to check that the interest rates on offer match the purpose for your home purchase; rates for owner-occupier home loans are often lower than investment home loans.

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Variable-rate home loanFixed-rate home loan
  • Interest rates are based on the market.
  • If the cost of lending increases for lenders for whatever reason variable rates will increase.
  • If the cost of lending decreases your variable interest rate may decrease.
  • Interest rates stay the same for a fixed period - usually one to five years.
  • After the fixed period ends your loan will automatically revert to a variable rate.
  • To avoid this, you will need to enter another fixed-rate contract with your lender.

3. Compare personalised home loan quotes

Matching the depth and knowledge of a broker with the simplicity and ease of comparing options at your own pace, comparing personalised home loan quotes allows you to do the following:

  • Compare the home loans with the best rates; and
  • Compare the features of the home loan; and
  • Compare the total repayments of your loan.

Finding a great rate will be just one of your considerations when searching for a home loan.

You’ll also want to consider the features, suitability and fees of each home loan when making a decision, and these aspects shouldn’t be mutually exclusive when comparing your options.

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About Money.com.au

Money.com.au want to make managing money easy and fun! By giving Australians simple tools so they can make the best decisions they can about their money.

We understand that the world of finance is complex, and offer free, extensive guides on Personal Loans, Car Loans and Business Loans, along with tools like our Budget Planning Spreadsheet to help you better manage and understand personal finance.

About the Author

Shaun McGowan from money.com.au

Shaun

McGowan

Shaun McGowan

Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.

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Money Pty Ltd (trading as Money.com.au) provides information about credit products and is authorised to do so as the holder of Australian Credit Licence 528698. Money.com.au does not compare every Lender in Australia. We are not a broker or credit provider and when we provide information via this website, we are not providing you with a recommendation or suggestion about a particular credit product. When you apply for a credit product via the Money.com.au website, you are not applying with us, you are applying directly with a Lender Partner. Before entering into any credit product from one of our Lender Partners, you should confirm the rates and product information with the Lender. All information on this website is general advice only and does not take into account your objectives, financial situation or needs. You should consider whether this advice is right for you and we encourage you to seek independent financial advice.