Spring property buyers: Why your home loan choice is as important as your new address

By Tom Watson · · 3 min read
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The spring property season is already underway and this year there seems to be a renewed sense of optimism among buyers.

Whether it’s because of price drops in major cities like Sydney and Melbourne, or just the result of pent up demand, buyers seem to be preparing themselves to enter the market this spring - particularly first-time buyers. 

According to the latest ABS figures released last month, first home buyer loan commitments increased by over 14% in July (seasonally adjusted), making up 32.5% of all owner occupier commitments. 

First-time buyers, upsizers, downsizers - whoever the buyer - their number one priority is likely going to be finding a home that ticks all the boxes in terms of price, location and the features of the property itself!

However, the vast majority of buyers also need finance. And while it might not be as exciting as visiting different open homes, putting the effort into comparing home loans can be seriously important for a number of reasons.

1. It could affect the deposit you need

You need a 20% deposit to get a home loan, right? 

It’s certainly true that the majority of banks require borrowers to take out lenders mortgage insurance (LMI) if they’ve got a deposit lower than 20%, but borrowers willing to shop around will be able to find plenty of loans available for deposits as low as 10% or even 5%. 

True, LMI can be a substantial additional cost, plus a larger loan will obviously mean that borrowers will need to be able to make larger repayments. However, a low deposit home loan may also allow buyers - notably first home buyers - to get into the market sooner. 

2. You could miss out on useful features

A lot of buyers simply focus on finding a loan that will let them buy a home. That’s fair enough, but there’s no reason why you can’t grab a mortgage with a great rate and useful features too, which may come in handy over the long run.

Want to reduce the amount of interest you're paying on your loan while still having access to that cash funds in case? An offset account could be just the feature for you. What about the ability to pay off your loan faster via extra repayments? 

Not every lender offers home loan features such as an offset account, redraw facility or split loan function, or the ability to make extra repayments. Yes, there may be extra costs associated with them but they’re certainly worth considering when comparing loans.

3. You could save yourself tens of thousands of dollars

It’s no joke. Depending on the interest rate and size of the mortgage, the difference in the amount of interest you pay over the life of the loan could be huge.

Take this example where Luke and Emma take out a $400,000 home loan which will be paid off over the next 25 years. Here’s the difference in interest repayments over the life of the loan using the average variable rate currently in the Mozo database (3.33%) and one of the lower rates on the market:

  • 3.33% variable rate: $189,863 total interest paid
  • 2.50% variable rate: $138,340 total interest paid

That’s a difference of $51,523 over that 25-year period, and it just goes to show the potential savings borrowers can make by comparing home loans. 

RELATED: Lenders slash rates as spring property season heats up

Ready to compare the latest rates on the market? Our handy home loan comparison tables make it easy to compare offers from a range of lenders side-by-side on everything from rates and features to fees.

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 14 September 2024 Important disclosures and comparison rate warning*

Home loan comparisons on Mozo

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  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Neat Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <60%
    Interest rate
    6.09 % p.a.
    Variable
    Comparison rate
    6.11 % p.a.
    Initial monthly repayment
    $3,027
    Go to site

    Competitively-priced variable rate loan. Ideal for owner occupiers and investors. No service fees to pay. Make free extra repayments and redraws. Flexible repayment schedule available.

  • Fixed Express Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.99 % p.a.
    Fixed 2 years
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Lock in a low 2 year fixed rate with the Mozo award winning Home Lender of the Year. Available for live-in borrowers with just a 10% deposit required. Free extra repayments (up to 20% in fixed period), free redraw and partial offset available. $10 monthly service fee. Aussie support centre. Fast approvals. Up to 6 free offset accounts (T&Cs apply).

  • 3 Year Special Fixed Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.69 % p.a.
    Fixed 3 years
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    This home loan is available for purchase or refinance, complete with 1, 2 or 3 year fixed rate options. Minimum 10% deposit required.

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Need help with refinancing?

You might have questions that need personal answers. We’ve teamed up with the mortgage brokers at Lendi to get you the answers you need, and a home loan deal you deserve.

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.

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