Comparing home loans isn’t just about finding the lowest number on a page. The rate that looks best in a table isn’t always the loan that costs you the least, or suits how you actually plan to use it. Here’s what to check, in order.
1. Start with your deposit and loan-to-value ratio (LVR)
Your LVR, the amount you’re borrowing as a percentage of the property’s value, determines which rates you’re even eligible for. A borrower with a 20% deposit (80% LVR) typically qualifies for better rates than one with a 10% deposit (90% LVR), and may avoid Lenders Mortgage Insurance (LMI) altogether. Work out your likely LVR before you start comparing, it narrows the field fast.
2. Compare the comparison rate, not just the advertised rate
The advertised rate is what the lender charges on the loan itself. The comparison rate folds in most fees and charges, giving you a more honest picture of what the loan actually costs over its life. A loan with a low advertised rate and a high comparison rate usually means costly fees sitting underneath the headline number.
Comparison rates are calculated on a standard loan amount and term, so they’re only a fair comparison between loans of a similar size and structure. Read our comparison rate vs interest rate guide for the full breakdown.
3. Decide what features you actually need
An offset account, a redraw facility, extra repayments, a fixed-rate lock, these all add value for the right borrower and add cost for the wrong one. If you’re never going to build up savings against an offset account, paying extra for one is money spent on a feature you won’t use. Be honest about how you’ll actually use the loan, not how you might use it in an ideal year.
4. Check the fees beyond the interest rate
Look for application fees, ongoing monthly or annual fees, valuation fees, and exit fees or break costs if you refinance early. A loan with no ongoing fees can beat a slightly cheaper rate with a $10 to $15 monthly fee attached, run the numbers over the time you expect to hold the loan.
5. Match the loan type to your situation
A basic home loan suits someone who wants the lowest ongoing cost and doesn’t need extra features. A packaged loan with an annual fee makes sense if you’ll use the bundled benefits, an offset account, a fee-free credit card, insurance discounts, enough to outweigh the fee. An investor’s priorities (interest-only options, tax considerations) differ from an owner-occupier’s.
6. Look past the lowest rate in isolation
The cheapest rate on the market today won’t always be the cheapest loan for you over five or ten years, particularly if the lender’s service, flexibility, or willingness to negotiate later doesn’t match your needs. Use our comparison table to shortlist two or three options, then look at each one’s full picture: rate, comparison rate, features, and fees together.
Next steps
Once you’ve shortlisted a few options, use our mortgage repayment calculator to see how each one plays out against your actual loan amount and term, then compare the shortlist side by side before you apply.