Cheap home loans: expert picks for May
Australia’s property market might be expensive, but your mortgage doesn’t have to be. Strong market competition between the big banks, customer-owned alternatives and digital lenders means you’ve got plenty of choice when it comes to choosing a cheap home loan.
And every dollar that you can save on your home loan is more money in your pocket, so why not be savvy?
The good news is that you can ditch high interest rates, and you don’t have to sacrifice features. Perks such as offset accounts, redraw facilities and extra repayments can all be found in low interest rate home loans.
We’ve selected five top picks below, or you can continue to compare all home loans from our database.
What makes a home loan cheap?
A good benchmark for determining whether a home loan’s rate is low or cheap is to see how it stacks up against the average.
Here’s the current variable and fixed average rates in our database.
- Average variable rate: 6.42% p.a.
- Average two-year fixed rate: 5.76% p.a.
Source: Mozo database. Average home loan interest rates on 8 May, 2025.
Lowest variable rate vs the average
Now let’s see the difference between the average variable interest rate versus the lowest variable interest rate in our database which is 5.64% p.a. (5.64% p.a. comparison rate*) from both HomeLoans360 and Pacific Mortgage Group.
| Interest rate (p.a.) | Monthly repayment | Interest over 25 years | Potential savings (over 25 years) | |
|---|---|---|---|---|
| Average Big Four variable | 6.60% | $3,407 | $522,204 | $0 |
| Average variable (overall) | 6.42% | $3,351 | $505,325 | $19,704 |
| Lowest variable | 5.64% | $3,112 | $433,714 | $91,315 |
| Source: Mozo database as at 8 May, 2025. Rates are for an owner occupier with <80% LVR, making principal and interest repayments over 25 years on a $500,000 home loan. | ||||
Cheap home loans: our picks
Knowing how much you can save with a low home loan interest rate, here’s some of the top deals we’ve reviewed that are well below the average rate and could save you hundreds of dollars on your repayments every year.
Fixed rate home loans
SWS Bank Premium 'Special' 3 Year Fixed Rate
- 4.99% p.a. for 3 years (6.15% p.a. comparison rate*)
- Extra repayments up to $20,000 each year
- Free redraw facility
- No establishment or monthly fees
- Minimum loan amount of $800,000
How it can reduce your costs
SWS Bank is offering one of the lowest fixed rates currently available at 4.99% p.a. for 3 years. Keep in mind that once this fixed period ends, you’ll roll onto a variable rate – currently sitting at 6.35% p.a. (6.35% p.a. comparison rate*) – so you may want to negotiate a better deal at this time, or consider refinancing your mortgage.
One drawback of this excellent rate is that it’s only available for loan amounts of $800,000 or more, but if you fall into this category, it’s a compelling option. Its lack of establishment and monthly fees, as well as the ability to make extra repayments worth up to $20,000 every year without penalty also adds to the appeal.
IMB Bank Fixed Rate Home Loan (2 years)
- 5.69% p.a. for 2 years (6.00% p.a. comparison rate*)
- Available with deposits of just 5%
- Up to $4,000 cashback available
- $6 monthly fee
- LVR of 80% or less required for cashback
How it can reduce your costs
IMB Bank is offering up to $4,000 cashback when you take out a new loan or refinance with the bank, which is one of the highest cashback offers in our database. To be eligible, your home loan amount must be $750,000 or more, with an LVR of 80% or less.
You’ll only need a deposit of at least 5% to secure this interest rate, which could be a drawcard for first home buyers, though it means those with higher deposits won’t benefit from a lower rate.
Variable rate home loans
Unloan Variable Home Loan
- Variable rate from 5.74% p.a. (5.65% p.a. comparison rate*)
- Loyalty discount every year for up to 30 years
- Mozo Experts Choice Awards winner 2023, 2024 & 2025^ for Low Cost Home Loan
- No offset account
How it can reduce your costs
In addition to its already low rate of 5.74% p.a (5.65% comparison rate*), Unloan’s unique feature is that it’s the only home loan that comes with an automatic loyalty discount. For every year you’re paying off your mortgage, Unloan will knock 0.01% p.a. off your interest rate every year for up to 30 years.
While it’s missing an offset account, it does allow for free extra repayments, so Unloan’s competitive rate, annual discount and the fact that it has won a Mozo Experts Choice Low Rate Home Loan for three years running makes it worthy of a place on the cheap home loan shortlist.
NRMA Insurance Variable Home Loan
- Variable rate from 5.78% p.a. (5.82% p.a. comparison rate*)
- Minimum deposit of 10%
- Mozo Experts Choice Awards 2025^ First Home Buyer Loan winner
- Optional offset account for $10 a month
How it can reduce your costs
If you have a small deposit of at least 10%, NRMA Insurance Home Loans offers a good variable interest rate of 5.78% p.a. (5.82% p.a. comparison rate*). That can make it particularly appealing to first-time buyers, and it was one of the winners in our Experts Choice Awards for First Home Buyer Loan.
NRMA Insurance Home Loans doesn’t offer tiered interest rates for larger deposits or equity, but we like that you can benefit from free additional repayments on your mortgage, plus online redraw at any time.
Regional Australia Bank Home Loan (Variable)
- Variable rate of 5.81% p.a. (5.82% p.a. comparison rate*)
- Lower rates available for bigger deposits
- Up to $4,000 cashback (T&Cs apply)
- $4,000 cashback for loans of $750,000 and over
How it can reduce your costs
Regional Australia Bank offers a variable rate of 5.81% p.a. if you have a loan-to-value ratio (LVR) of 80%, but if you have a larger deposit or more home equity, you’ll get an even better deal thanks to tiered interest rates. For example, an LVR of 60% or less gets you a rate of 5.69% p.a. (5.70% p.a. comparison rate*).
The provider can also put some money back in your pocket thanks to its cashback offer, though the highest amount is only available for loans of at least $750,000.
For those feeling unsure about the online application process, we like that Regional Australia Bank offers a dedicated relationship manager to guide you through the process.
Ubank Flex Home Loan with offset account
- Variable rate from 5.84% p.a. (6.08% p.a. comparison rate*)
- Lower interest rates for higher deposits or equity
- Comes with an offset account
- Lowest rate only available with 60% LVR
How it can reduce your costs
If you’re quite a way into paying off your mortgage, Ubank’s Flex Home Loan offers a variable rate of 5.84% p.a. (6.08% p.a. comparison rate*), though just note you’ll need an LVR of 60% or less to get this rate.
We like that this Ubank home loan comes with multiple offset accounts that you can separate into ‘spend’, ‘save’ and ‘bills’ transaction accounts. Keeping money in these pots can help you offset interest on your home loan, and also helps keep a closer eye on your spending.
Ubank’s Flex Home Loan rates are slightly higher for those with smaller deposits or less equity, so compare this to other options with an offset account to see what works best for you. Finally, Ubank is backed by NAB, so you’ve got that peace of mind.
Loans.com.au Variable Home Loan 90
- Variable rates from 5.79% p.a. (5.83% p.a. comparison rate*)
- Mozo’s Experts Choice Awards 2025^ First Home Buyer Loan winner
- No application fees to pay
- Optional offset account costs extra
How it can reduce your costs
You can borrow up to 90% with Loans.com.au and still get a competitive interest rate of 5.79% p.a. (5.83% p.a. comparison rate*) – that’s better than the average for those with small deposits of 10%, making it a compelling option for first home buyers.
No application or ongoing fees also help to reduce your costs, but you can expect the fairly standard settlement fee and applicable government fees. On the plus side, any additional repayments you make on your home loan can be redrawn at no extra cost.
What else to consider when choosing a low cost home loan
Fees and charges
A low interest rate is essential when choosing a cheap home loan, but it’s not the only factor you should consider – fees are also important.
For example, you may find you’re better off with a slightly higher interest rate with no fees attached, rather than a cheaper interest rate that comes with a monthly or annual fee.
| Interest rate (p.a.) | Ongoing fee | Interest + fees over 25 years | Difference | |
|---|---|---|---|---|
| Option 1 (annual fee) | 6.05% | $395 | $480,917 | |
| Option 2 (monthly fee) | 6.05% | $30 | $480,042 | -$875 |
| Option 3 (without fee) | 6.10% | $0 | $475,642 | -$4,400 |
| Source: Mozo database. Rates are for an owner occupier with <80% LVR, making principal and interest repayments over 25 years on a $500,000 home loan. | ||||
You don’t need to do any complex calculations to work out the total cost of your mortgage’s interest rate and fees, you can simply use our home loan comparison calculator.
The comparison rate
The comparison rate gives you an indication of the true cost of a home loan at a glance.
It takes the interest rate along with some fees and charges, and combines them into one percentage figure, so you can compare home loans across different lenders a little easier.
Lenders are required to display the comparison rate next to the interest rate, so if these two numbers are quite different, you’ll know instantly that there’s fees attached to the loan.
Calculate your home loan repayments
We can show you the monthly repayment amount for a range of loans
Cheap home loans: FAQs
Which bank has the cheapest home loans?
Interest rates change all the time, so there isn’t one bank that has the cheapest home loans for all borrowers. As of 1 April, 2025, the provider with the lowest variable rate with no conditions is HomeLoans360 at 5.64% p.a.
Do the major banks have cheap home loans?
The Big Four banks don’t typically offer the lowest interest rates, but if you are looking for their cheapest rates, you’ll want to consider digital-only offers from the major players. For example, Commonwealth Bank’s Digi Home Loan is the lowest variable rate from CommBank, while ANZ’s online-only brand, ANZ Plus, offers lower rates than ANZ.
Is it cheaper to get a fixed or variable home loan?
Whether a fixed or variable rate will be cheaper for you depends on your financial situation.
Providers often have competitive fixed rate loans which can save you from the worry of your repayments fluctuating during the fixed period. Variable rates are linked to the market and this means that if there are rate cuts you can benefit from them, which will make your home loan repayments cheaper.
Many lenders offer borrowers the option to split their home loan. This means that a portion of the loan is fixed and a portion of the loan is variable so you can get the best of both worlds.
* 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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