Australia's cheapest home loans in February 2024

Whether you’re buying a new property or refinancing an existing mortgage, knowing where to find the best value home loans is one of the best things you can do to save more money over the length of your loan.

But what does that look like? Well, it depends on your circumstances, financial needs, and the loan’s features. For example, a customer with a clean credit score will likely receive a better interest rate than a borrower with poor credit.

Another home loan feature that can help reduce the cost of your loan is the ability to make free extra repayments. This handy feature can help you pay your loan off faster, therefore minimising the amount of interest you’re actually paying overall.

Similarly, a loan with flexible repayment options lets you tailor your repayment frequency to your budget and pay schedule. It could also help to choose a shorter repayment period to reduce the total amount of interest.

What makes a cheap home loan

So what do cheap home loans look like? The first thing you’ll see with a cheap home loan is that they have a lower interest rate. Low interest rates mean that you’re paying less over the length of your loan for borrowing money from the bank.

Another thing to look out for with cheap home loans is that they have low or no fees. While some fees can seem small or inconsequential, over time they can end up leading to a lot of money going to the bank instead of your savings account.

Loan terms can also make a difference in how cheap a home loan ends up being. While a shorter-term loan means higher monthly payments, it also means that you’ll not be paying more interest on the loan. Most loans tend to be 25-30 years, and while 5 years doesn’t seem like a lot, the amount of interest paid can really add up.

How to find the cheapest home loans

It can be difficult to know which home loan offers the best in terms of features and interest rates. Usually, a good low-cost home loan offers a competitive interest rate and features that can help borrowers to reduce their interest rates or monthly repayments.

One feature that can make your home loans cheaper are offset accounts. With an offset account, you can keep a lump sum of cash in the account which will help to reduce the amount of interest payable. 

Another handy feature that can make your home loan cheaper is a free extra repayments option. With these, any extra savings you come by can help you to pay the loan off faster and can also reduce how much you’re repaying on a regular basis. By paying the loan off faster and reducing the amount you’re paying, the less you’ll find yourself paying in interest which can save loads of money in the long term.   

Who are cheap home loans for?

There are two kinds of home buyers when it comes to cheap home loans, owner-occupiers and investors. For the most part, the difference between these two kinds of borrowers is what they intend to use the property for.

Owner-occupiers are people who take out a home loan to buy a property that they plan to live in. Generally, owner-occupiers will be required to have a loan-to-value ratio (LVR) of 80% which means that a home worth $500,000 will usually need a loan worth $400,000 and a deposit of $100,000.

Investors are people who take out home loans so that they can rent the property out (or use it as something like an Airbnb). Investor focused home loans will generally have a higher interest rate than owner-occupier focused loans as banks tend to view these as being a bit more of a riskier loan. 

What kind of cheap home loans are there?

The two main kinds of cheap home loans would be variable rate home loans and fixed rate home loans. There are also split home loans where half of the loan is fixed and the other is variable. 

A variable rate home loan means that at any time the bank can announce a change in the interest rate. In Australia, variable rate home loans tend to be the most commonly held kind of home loan. 

Fixed rate home loans are loans that have an interest rate that is set for a certain period of time. In general, they will tend to have a higher interest rate in comparison to a variable rate home loan.

How to compare cheap home loans

When looking for a cheap home loan, it’s not always obvious that you’ve actually got the cheapest loan available. So, one of the best ways of getting the cheapest home loan is by comparing home loan providers. 

However, it can be difficult to know how to compare a home loan as the cheapness of a home loan isn’t just down to the interest rate listed—after all, a low interest loan with high fees isn’t really that cheap when you look at the long term.

  1. Check Interest rates as the amount you’re paying can make a difference in how cheap the loan is.
  2. Compare fees while fees can seem inconsequential, the amount you could be paying monthly or annually can build up over the life of the loan.
  3. Look for features such as offset accounts and extra repayments as they can help to reduce the interest you would be paying otherwise.

Cheapest home loans in February 2024

With a cash rate that now sits at 4.35%, last year saw home loans get much more expensive. For 2024, the RBA will only be meeting 8 times this year (instead of last years 11) with the next meeting scheduled for this month on the first tuesday. However, it's likely that we'll see a hold as recent CPI data for the December quarter was reported at 4.1%.

Even if rates remain steady, they are still stratospheric compared to the same time last year. Currently, the average variable rate for principal & interest home loans is 6.84% p.a. in the Mozo database, while the lowest variable rate is 5.79% p.a. (comparison rate 6.07% p.a.).

Cash-back offers for refinance home loans have also largely dried up from the market, but this has always been a temporary way to get customers in the door. What’s more important is to compare interest rates, fees, and features when comparing the true cost of a home loan. 

Out of the offers we track, the lowest variable home loan rates (LVR < 80%, $400K) are:

  • Gateway Bank | 5.79% p.a. (6.08% p.a. comparison rate*)
  • Homeloans360 | 5.89% p.a. (5.89% p.a. comparison rate*)
  • Pacific Mortgage Group | 5.89% p.a. (5.89% p.a. comparison rate*)

Averages calculated using data available in the Mozo database, correct as of 15 February 2024.

When looking for a cheap home loan, it can be difficult to know which home loan offer is the best in terms of features and interest rates. Usually, a good low-cost home loan that offers some of these features is a great guideline for what to look for. All that being said, it can still be tricky when you’re a first time home buyer.

That’s why at Mozo, we tried to simplify the process. After sifting through 475 home loans from 99 lenders, our Mozo Experts found the most affordable options worthy of a win in the 2024 Mozo Experts Choice Home Loan Awards^.

So, to help get you one step closer to your dream home, below are some of the cheapest home loans in Australia that received a 2024 Mozo Experts Choice Award^ in our Low Cost Home Loan award category.

Remember: the list below only details a small selection of the home loans crowned in the awards this year. Head to the 2024 Mozo Experts Choice Home Loan Awards page for the full list of winners across all the categories we assess, and read how these loans were selected in our home loan awards methodology report.

Offset Home Loan category winners

Up Variable Home Loan
  • 6.15% p.a. variable rate (6.15% p.a. comparison rate*)
  • No application, monthly, annual, redraw, or discharge fees
  • Multiple Mozo Experts Choice Award Winner 2024^

With a competitive variable interest rate of 6.15% p.a. (6.15% p.a. comparison rate*), Up offers users a low-fee home loan, all accessed through their 2023 Mozo Experts Choice Award-winning app. This eye-catching home loan only needs a 10% deposit and offers free unlimited repayments with a redraw facility, and up to 50 offset accounts (T&Cs apply). It’s no wonder it won awards in the first home buyer and offset home loan categories in the 2024 Mozo Experts Choice Awards. They’ll also cover the first $400 of your property valuation. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank.

Low Cost Home Loan category winners

Unloan - Variable Home Loan
  • Variable rates from 5.99% p.a. (5.90% p.a. comparison rate*)
  • Rate discount annually (T&Cs apply)
  • Free extra repayments and redraws
  • Low cost home loan winner - Mozo Experts Choice Awards 2023 & 2024^

Expert verdict:

Unloan’s Variable Home Loan has taken out a low cost home loan award for the second year running in the Mozo Experts Choice Awards^. Built by CommBank, Unloan offers owner-occupiers a super low 5.99% p.a. variable rate (5.90% p.a. comparison rate*) along with a loyalty discount that shaves 1 basis point off your interest every year for up to 30 years. Loan features include free extra repayments and redraw, and there are no pesky fees to pay. Available for refinance loans of up to $10M. Minimum 20% deposit.

First Home Buyer Home Loan winners

loans.com.au - Variable Home Loan 90
  • 6.04% p.a. variable rate (6.06% p.a. comparison rate*)
  • Free extra repayments and redraw + optional offset account
  • Available to borrowers with 90% LVR
  • 2024 Mozo Experts Choice Award winner^
Find out more

Aussie owned loans.com.au has been taking on the banks with low rate online home loans since 2011, and the Variable Home Loan 90 boasts a competitive rate for borrowers with a 10% deposit or equity or more. Our judges rated it among the best for first home buyers in the  2024 Mozo Experts Choice Awards^ but it is also a suitable choice for refinancers or new home buyers. Flexible features include unlimited free extra repayments, free redraw and an optional offset account for 0.10%, plus there are no pesky ongoing fees to pay. The loan settlement fee is $300. Available for loans of up to $2 million.

Editor's picks: Home Loan deals for February

Sucasa Ultra Low Rate Variable Home Loan
  • 6.30% p.a. Variable (6.58% p.a. comparison*)
  • Pay no lender’s mortgage insurance (LMI) when borrowing up to 95% (T&Cs apply)
  • Free extra repayments and redraw facility
  • Metro borrowers only

The Ultra Low Rate loan from newcomer Sucasa is a low deposit home loan, just requiring a deposit of as little as 5% and without the need for lenders mortgage insurance (LMI)( T&Cs apply). Enjoy unlimited extra repayments to pay down your loan faster, plus a free online redraw. There are no ongoing fees but there are upfront fees of $790 to cover valuation and settlement. It’s only available for borrowers in metro areas and for purchases up to $2.5m. $795 discharge fee applies.

UBank - Neat Home Loan
  • Variable rates from 6.09% (6.11% comparison rate*) - min 40% deposit
  • Fast and paperless online application process
  • Free extra repayments

UBank has made a name for itself as one of Australia's best value online lenders, and its new Neat Home Loan is a case in point. This low cost variable home loan rewards borrowers with lower loan-to-value-ratios (LVRs) with its best rates, while also being light on fees. Features include free extra repayments and redraw. Plus, UBank is backed by NAB so you get all of the savings an online lender can offer, as well as the security of big bank backing.

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Looking for an even wider range of home loans to compare? Pay a visit to the Mozo home loan comparison hub to view the latest interest rates from more than 90 mortgage lenders.

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

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