Compare Home Loan rates from 5.59%

A home loan is a sum of money that's borrowed from a lender to finance the purchase of a home or investment property. The borrower repays this debt with interest in regular instalments over an agreed term, typically 25-30 years. To provide the lender with security, the property is held by the lender as collateral until the loan is paid off - an arrangement known as a mortgage.

The principal amount is the amount you borrow from the lender, and pay back over time - plus interest. Your repayments typically include both principal and interest payments (unless it's an interest-only loan).

1. Make more frequent weekly or fortnightly repayments
2. Make extra repayments
3. Consider refinancing your home loan to a lower interest rate
4. Consider an offset account
5. Pay off the principal

Most home loan terms are between 25-30 years but a handful of lenders in Australia offer loan terms of up to 40 years.

A credit rating is a numerical score that represents your trustworthiness as a borrower. The higher the score, the more trustworthy a borrower looks to a lender. Your credit score can determine how much a lender is willing to lend you for a home, what interest rate to charge you, and whether you can afford to meet your repayments.

Equity in a home is the difference between the value of your home and how much you owe on the mortgage. For example, if your property is worth $500,000 and you still owe $300,000, your equity is $200,000. Our equity calculator can help you work out how much equity you have in your property.

The home loan application process can be quite lengthy but isn't too complicated. It will generally involve the following steps:

1. Save for a deposit
2. Find your perfect home or getting pre-approval first
3. Gather your required documents
4. Compare home loan providers
5. A preliminary assessment by the lender
6. Submit your application to the lender
7. The lender completes a property valuation
8. The lender approves or rejects the loan
9. The lender sends you an offer
10. The loan is settled and the funds are advanced to you.

Read our home buying checklist for a complete breakdown of everything you need to know.

Fixing your home loan can be good for those who need cash flow certainty, which is why many investors and first-time buyers choose them. If interest rates are very low, locking in that low rate before they rise can be a good idea. However, that can also backfire if interest rates drop even further, as those changes only apply to variable home loans, not fixed home loans. It can also be harder to repay a fixed loan early as you will have to pay significant break costs for terminating the fixed-rate period.

If your current lender can't offer you what you need anymore, it may be time to refinance your home loan. Shop around and compare new home loans, calculate the costs of switching and consider the length of the new loan. Once you’ve found the ideal loan, apply through the lender and exit your old home loan.

A comparison rate helps you work out the true cost of a loan by combining the interest rate plus a number of fees and charges you can expect to pay over the life of the loan into a single percentage figure. If there is a big difference between the advertised rate and the comparison rate on a product, it probably means there are significant establishment or account-keeping fees.

How much you can borrow for a home loan will depend on many factors such as your income, your savings history, your monthly living expenses, and any outstanding debt you may have. However, it is generally recommended that you borrow no more than 80% of the value of the property, meaning you must have at least a 20% deposit saved. Use our calculator to work out how much you can borrow.

A redraw facility is a home loan feature that allows borrowers to withdraw extra repayments they have made on their home loan. Redraw facilities are useful if you want to reduce your loan amount as quickly as possible, while being able to access those funds at some point in the future should a financial emergency or other situation arises where you may need that money (like a renovation).

An offset account is a transaction account linked to your home loan where the money stored in the account is ‘offset’ against your home loan debt when interest is calculated, reducing the amount of interest charged on your loan.

To be eligible for a home loan, you must have:

• A deposit (at least 5%)
• A good credit history
• A stable income
• A regular savings history
• No significant debts
• At least two forms of identification, one of which must be photo ID
• Bank statements and payslips
• Council rates for any other properties you own

For other relevant documents, see the Home Loan's 101

The amount needed for a house deposit varies, but you'll usually need at least 5% of the property's value, which is an LVR (loan-to-value ratio) of 95%. To avoid paying Lenders Mortgage Insurance (LMI) most lenders will require you to provide a deposit of 20% of the property's value.

A mortgage default (missing a repayment by 90 days) won't bankrupt you but will require you to pay a late fee up to $200. This may seem relatively minor, but defaulting on your mortgage will also be recorded on your credit file, damaging your credit score.

The time it takes for a lender to approve your home loan can differ from lender to lender, but it generally takes anywhere between four to six weeks. You can speed up your home loan approval by ensuring you meet all the borrowing criteria, have all your paperwork ready and correctly fill out the application form, have a good savings and credit history, and get pre-approval.

The First Home Guarantee (FHBG) is an initiative aimed at helping Australians get onto the property ladder sooner. The Government (via Housing Australia) acts as a guarantor for up to 15% of the loan, meaning first home buyers can buy with a deposit as small as 5% without being charged lenders mortgage insurance.  There are limited spots each year, and only select lenders are eligible.