How to bring down your home loan costs even as property prices go up

Steep housing costs
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Finding a top home loan has never been more important, as the 'asking prices' for houses in major cities such as Sydney appear to be rising. 

The asking price for a three bedroom house in Sydney for the week ending January 30 was up 21%, according to recent data from SQM Research. 

This puts the asking price at about $1.7m.

This represents a significant jump, especially given that units only moved up 1.4% to an asking price of $791,121 in the same week.

SQM crunches the data on this weekly basis to try and offer a more timely read of the selling market. This can be useful for those considering buying a specific size of home.

For example, two bedroom units are rather popular in major cities such as Melbourne and Sydney. The asking price on two bedroom units in Sydney at the end of January was about $860,259, as per SQM’s data. 

This can be broken down further by various city regions, such as the eastern suburbs of Sydney where the asking price on a two bedroom unit was an incredible $1.2m at the end of January. Meanwhile, a two bedroom unit in Parramatta was going for just $601,000 over the same week. 

A simple comparison like this only highlights the importance of looking at a few different suburbs within a given city because the laws of supply and demand can be applied to any given area – and are changeable over time.

Prices one thing, home loan rates another 

This type of property review also shows a prospective buyer that the size of your home loan - and indeed your first deposit - can vary greatly when considering different housing types. 

For example, if your goal is to simply get onto the property ladder, then a smaller apartment in a suburb with a good supply of units is surely going to help you bring down the cost of your home loan. 

If, for instance, you were to buy a unit in the Liverpool area of Sydney, you’d be looking at around $625,000 asking price, as per SQM. Let’s say you make a (20%) first deposit of $12,500 on that property – you would then require a home loan of about $612,500.

The average variable home loan rate is currently 6.85% p.a. in the Mozo database, so monthly repayments on this amount over 25 years would be $4,271. 

However, you could bring your costs down quite a bit just by shopping around for a better home loan rate. Say you were able to secure 6% p.a., you could reduce your monthly repayments to $3,846.

Clearly it’s well worth the effort doing some basic home loan comparisons!

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can compare more home loans here.
Last updated 25 July 2024 Important disclosures and comparison rate warning*
  • Basic Home Loan

    • Owner Occupier
    • LVR 90-95%
    • Principal & Interest
    Interest rate
    7.19 % p.a.
    Variable
    Comparison rate
    7.22 % p.a.
    Initial monthly repayment
    $4,747
    Go to site

  • OMG Home Loan

    • Owner Occupier
    • Principal & Interest
    • >80% LVR
    Interest rate
    6.29 % p.a.
    Variable
    Comparison rate
    6.32 % p.a.
    Initial monthly repayment
    $4,328
    Go to site

    BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR 80-95%
    Interest rate
    6.75 % p.a.
    Fixed 3 years
    Comparison rate
    7.09 % p.a.
    Initial monthly repayment
    $4,540
    Go to site

    Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.

  • Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR 80-95%
    Interest rate
    6.75 % p.a.
    Fixed 3 years
    Comparison rate
    7.30 % p.a.
    Initial monthly repayment
    $4,540
    Go to site

  • Special Real Deal Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR 80-95%
    Interest rate
    6.84 % p.a.
    Variable
    Comparison rate
    6.88 % p.a.
    Initial monthly repayment
    $4,582
    Go to site

    Refinancers or first home buyers pay no monthly or annual fees. Up to $3,000 cashback when you complete your home loan application online. $2,000 cashback on loans ≥$250K; or $3,000 cashback on loans ≥$500K. LVR ≤80%. T&Cs and credit criteria apply.

  • Basic Home Loan

    • Owner Occupier
    • LVR 90-95%
    • Principal & Interest
    Interest rate
    7.19 % p.a.
    Variable
    Comparison rate
    7.22 % p.a.
    Initial monthly repayment
    $4,747
    Go to site

  • Offset Home Loan

    • Owner Occupier
    • LVR 90-95%
    • Principal & Interest
    Interest rate
    7.19 % p.a.
    Variable
    Comparison rate
    7.43 % p.a.
    Initial monthly repayment
    $4,747
    Go to site

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