Why the bigger banks aren’t always the best place to find a home loan in 2020

Has the new decade got you reevaluating your mortgage decisions of the past? Or has it got you looking towards the future, with a new home on the horizon? 

No matter which way your head is turned, when it comes to refinancing or taking out a new home loan there are a whole bunch of things to consider - and above all, choosing the right lender is crucial.

With three RBA cuts last year, interest rates on home loans have become pretty competitive, with some of the lowest rates in our database sitting below 3.00% - rates which are being offered up by smaller lenders, not the big banks.  

According to our latest data, at the beginning of 2020 the average variable interest rate amongst the Big Four was 3.98% p.a^ and, despite this, over 80% of Aussies still bank with them despite there being better offers on the market.  

So if you want to get ahead of the curve, here are some killer home loans offered by smaller lenders. 

Home Loans 2020

loans.com.au - Smart Home Loan 80
  • 2.88% variable rate (2.90% comparison rate*)
  • No ongoing fees
  • Complimentary extra repayments and redraw facility
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When it comes to home loan interest rates and features, the Smart Home Loan from loans.com.au delivers both. Not only does it come with an attractively low 2.88% variable rate (2.90% comparison rate*), there are also no pesky ongoing fees. But that’s not all that’s on offer! Borrows can make extra repayments for free as well as take advantage of a redraw facility if they need it. This loan is both a money-saver and flexible, so what more could you want?

Athena - Liberate Variable Home Loan
  • Rates from 2.84% (2.80% comparison rate*)
  • Zero fees
  • Free extra repayments and redraw facility
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If you’re after a hot loan from a smaller lender, Athena might be the perfect place to start. With competitive variable rates from 2.84% (2.80% comparison rate*) as well as handy features like complimentary extra repayments and a free redraw facility, there’s more reasons than one to consider Athena’s Variable Home Loan. And if you hate forking out your hard earned cash on unnecessary fees, then don’t worry, because there aren’t any application or ongoing fees. Think about what you might save over the life of your loan!

UBank - UHomeLoan
  • 2.69% 3 year fixed interest rate (3.19% comparison rate*)
  • Two 2019 Mozo Experts Choice Awards^^
  • Complimentary extra repayments up to $20,000 p.a.
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Looking for a competitive fixed rate home loan? UBank’s UHomeLoan (Fixed) could be the answer! With a range of fixed terms and rates as low as 2.69% (3.19% comparison rate*) on a 3 year fixed term, UBank has proven they are a competitive player in the home loan game. But if good rates aren’t enough, borrowers can make complimentary extra repayments up to $20,000 a year. It’s no wonder this loan took out two 2019 Mozo Experts Choice Awards^^ in the best Fixed Rate Home Loan and best Investor Fixed Home Loan categories.

Tic:Toc - Fixed Home Loan
  • 2.84% 3 year fixed rate (2.92% comparison rate*)
  • 2019 Mozo Online Home Lender of the Year^^
  • Optional offset account available
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For an award-winning home loan from an award-winning lender, Tic:Toc and it’s Fixed Home Loan could tick all the right boxes for you. With approvals in as little as 22 minutes, this online lender could offer you a competitively low rate before your lunch break is over! For owner occupiers, rates start at 2.84% (3.92% comparison rate*) for a 3 year fixed loan term and for investors a low 2.89% 3 year fixed rate (3.09% comparison rate). There are also a bunch of features, like complimentary extra repayments and an optional offset account for $10 per month. Not only was Tic:Toc crowned 2019 Mozo Online Lender of the Year^^, it also received two 2019 Mozo Experts Choice Awards^^ for best Fixed Rate Home Loan and Best Investor Fixed Home Loan.

Homestar - Star Essentials Home Loan
  • Variable rates from 2.74% (2.77% comparison rate*)
  • Redraw facility and extra repayments available
  • No application fee
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Homestar’s Star Essentials Home Loan not only offers low rates for owner occupiers, there are also some handy features that will make this loan worth remembering. Variable rates start at a competitive 2.74% (2.77% comparison rate*) and there are no ongoing service fees either. But if flexibility if what you’re after, Homestar have some features that will help you make repayments in the way you want to. Borrowers can make extra repayments towards their loan (for free) if they wish to, as well as have the option to redraw them later on. Plus, there is the option to make weekly, fortnightly or monthly repayments - it’s all about what suits you!

Thinking about a smaller lender? Here are the pros and cons... 

While interest rates and home loan features are pretty important when selecting a mortgage, things like customer experience, approval times, branch access and flexibility could also come into play.


  • Competitive interest rates: Small lenders can’t always rely on customer loyalty alone, so many of them make their products and rates pretty hot to attract borrowers. 

  • Customer service: Whether the lender is local, customer-owned or online it’s more common to find a more personalised banking experience if you opt small

  • Accessibility: Some smaller lenders are online-only, meaning there are some pretty user-friendly banking apps around where you can manage your mortgage wherever and whenever you need. 


  • Approval time: Smaller home loan lenders don’t have the resources or the teams that big banks do, so sometimes loan approvals can take a little longer. But if it’s a better product, a longer wait may be worth it.

  • Branches: If you still like things old school and can’t shake the idea of being able to pop into your local branch whenever you need, bigger banks have more branches so there’s more likely to be one closer to you. Some small lenders have branches but others are solely online, so it may not be the right option for you.   

RELATED ARTICLE: 5 home loans worth switching to in 2020 

Need a little extra help finding the right home loan for you? To find more lenders jump over to our home loan comparison table or have a read of our handy guides and tips

^Big 4 average variable home loan rate, as of 2 January 2020. 

^^For a full list of winners, check out the 2019 Mozo Experts Choice Home Loan Awards page.

* 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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