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

By JP Pelosi · · 2 min read
Fact Checked
Advertiser disclosure
Steep housing costs
Image: Getty

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!

Mozo may receive payment if you click products on our site. We don’t compare the entire market, but you can compare more home loans here.
Last updated 24 October 2024 Important disclosures and comparison rate warning*

Home loan comparisons on Mozo

Promoted

  • Fixed Home Loan

    • Owner Occupier
    • Principal and Interest
    Interest rate
    5.54 % p.a.
    Fixed 2 years
    Comparison rate
    5.93 % p.a.
    Initial monthly repayment
    $4,106
    Go to site

    Competitive fixed rate on up to a 30 year loan term. No application fees to pay. Additional repayments up to $20,000 per year without penalty. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

  • Fixed Home Loan

    • Owner Occupier
    • Principal and Interest
    Interest rate
    5.54 % p.a.
    Fixed 2 years
    Comparison rate
    5.93 % p.a.
    Initial monthly repayment
    $4,106
    Go to site

    Competitive fixed rate on up to a 30 year loan term. No application fees to pay. Additional repayments up to $20,000 per year without penalty. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

  • Fixed Rate Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <90%
    Interest rate
    5.89 % p.a.
    Fixed 5 years
    Comparison rate
    6.62 % p.a.
    Initial monthly repayment
    $4,266

  • Variable Home Loan

    • Owner Occupier
    • Principal and Interest
    Interest rate
    5.98 % p.a.
    Variable
    Comparison rate
    6.02 % p.a.
    Initial monthly repayment
    $4,308
    Go to site

    Competitive variable rate on up to a 30 year loan term. No application fees to pay. Unlimited additional repayments. Free online redraw. Optional 100% offset feature ($10/month) 10% minimum deposit. Fees & charges apply, Australian Credit Licence 237879 is held by Bendigo and Adelaide Bank Limited, the credit provider.

  • Simple Home Loan Variable

    • Owner-Occupied
    • Principal and Interest
    • LVR>70%
    Interest rate
    6.19 % p.a.
    Variable
    Comparison rate
    6.19 % p.a.
    Initial monthly repayment
    $4,405
    Go to site

    Enjoy a low variable rate with no application, ongoing or monthly fees to pay. Access your money via internet banking at any time with free redraws. Make additional repayments at any time. Available for owner occupied, investment and interest only repayments.

  • Discounted Home Value Loan

    • Owner Occupier
    • Principal & Interest
    • LVR 80-90%
    Interest rate
    6.39 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $4,499

    Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).

image of houses

Need help with your Home Loan?

Whether you're looking to purchase a new home or refinance your existing loan, our friends at Lendi can help! Lendi’s expert advice is completely free of charge.

Learn more

* 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

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.

Compare home loans