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Home loan interest rates: July 2021

While official interest rates are still at historic lows, there are signs the market believes this won’t be the case for much longer. Several major banks now expect the RBA will hike rates sooner than expected, and we’ve seen a number of lenders factoring this into their pricing decisions as of late.

This is most evident in long-term fixed rates, which have been edging upwards for a few months now. Among lenders we track, the average 4-year fixed rate currently sits at 2.50% p.a. (up from 2.37% in March), while the average 5-year rate is slightly higher at 2.75% p.a. (up from 2.62% in March).

That said, there is still value to be found among long-term rates, and locking one in now could work out in borrowers’ favour when interest rates do eventually go up. Among lenders in our database, the top fixed rate home loan offers are:

Among variable rate loans we track, Reduce Home Loans offers the lowest rates for owner occupiers at 1.99% p.a. (2.05% p.a. comparison rate*), while the best value investor loan comes courtesy of Tic:Toc, which offers a 2.19% p.a. variable rate (2.20% p.a. comparison rate*).

At the time of writing, the average 2-year fixed rate in our database is 2.27% p.a., while the average variable rate sits nearly a full percentage point higher at 3.22% p.a. While still trailing behind fixed rates, cuts to variable rates have become much more common in recent months. This is likely a bid by lenders to stay competitive as pressure to raise fixed rates increases.

To find out how interest rates are tracking in other banking products for July, check out our snapshots for Personal Loan Interest Rates, Car Loan Interest Rates, Savings Account Interest Rates and Term Deposit Interest Rates.

Picture of Peter Marshall
Peter Marshall
Banking expert

Peter has been working in the Australian banking and finance industry for over 20 years and oversees Mozo’s extensive product database. He is regularly sought out for his expert commentary and analysis on banking and interest rates trends by print, radio and TV media.

Latest home loan interest rates on Mozo - last updated 27 July 2021

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Mozo Experts Choice 2021
    Smart Booster Home Loan

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.variable for 24 months and then 2.25% p.a. variable
    2.21% p.a.

    New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.

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    UHomeLoan (1 Yr Fixed)

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.79% p.a.
    fixed 1 year
    2.32% p.a.

    Fast, easy to apply and no ongoing fees. Choose between weekly, fortnightly or monthly repayments. 1 year fixed rates are for new Owner Occupier Principal & Interest loans.

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    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.32% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

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    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required. Winner of three Mozo Expert's Choice Awards for 2021.

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    Variable Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.

    Refinance only. Super-fast digital application process. Zero upfront fees. No on-going service fees. Free 100% offset sub account. Comes with Visa debit card and the ability to use digital wallets; Apple and Google Pay. 25% deposit required.

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    Details
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    Special Offer Reward Me Fixed Rate Home Loan

    Owner Occupier, LVR <80%, 300k+

    interest rate
    comparison rate
    Initial monthly repayment
    1.98% p.a.
    fixed 2 years
    2.66% p.a.

    Enjoy $3,000 cashback when you refinance with Virgin Money (T&Cs apply). Additional repayments up to $10,000 per annum. Reverts to the discounted variable rate on expiry of the fixed term.

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    Mozo Experts Choice 2021
    Discount Fixed Rate

    Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    1.89% p.a.
    fixed 2 years
    3.05% p.a.

    Lock in a competitive rate for 2 years. Only 20% deposit required. Flexible repayment options and make up to $5,000 in additional repayments annually. Refinance to BOQ by 29 August, 2021 and get $3,000 cashback(T&Cs apply).

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    Mozo Experts Choice 2021
    Variable Home Loan Special

    Owner Occupier, Principal & Interest, LVR <70%

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    2.02% p.a.

    Special rate applies to home loan applications submitted by 31 July 2021. Unlimited additional repayments, free redraw, 100% offset account. 30% deposit required. Simple online application. Low Cost Home Loan winner in the Mozo Expert's Choice Awards for 2021.

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    Mozo Experts Choice 2021
    Well Balanced

    Owner Occupier, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    2.02% p.a.

    Low rate variable home loan with optional offset. Free online redraw. No valuation fee. Purchase, refinance or equity release purposes allowed. Offset Home Loan winner in the Mozo Expert's Choice Awards for 2021.

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    Special Fixed Rate Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.89% p.a.
    fixed 2 years
    3.67% p.a.

    Lock in a low fixed rate or choose to split your loan between fixed and variable. Insurance discounts and no fee credit card or zero fee personal loan available. $2,000 cashback offer for home loans over $250k with at least a 20% deposit when refinancing to Newcastle Permanent.

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    Fixed Rate Home Loan

    Owner Occupier, Principal & Interest, LVR <80%

    interest rate
    comparison rate
    Initial monthly repayment
    1.88% p.a.
    fixed 2 years
    2.86% p.a.

    Ability to split your home loan between Fixed and Variable. Dedicated Relationship Manager. Min 20% deposit. Refinancers borrowing $250,000 or more could receive $3,288 cashback (T&Cs, eligibility and lending criteria apply).

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    Own Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    1.84% p.a.
    fixed 1 year
    2.63% p.a.

    Competitive fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

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    Details
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    Fixed Home Loan Special Offer

    Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    1.89% p.a.
    fixed 2 years
    2.85% p.a.

    Competitive low fixed rates for owner occupiers. No monthly account keeping or loan establishment fees. 20% deposit required. Receive $3,000 cash when you refinance to a Suncorp Bank home loan of $750K or more with LVR <= 90% (T&Cs apply). Apply by 31/08/2021.

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    Prime Home Loan

    Owner Occupier, Principal & Interest, LVR <70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.44% p.a. variable
    2.49% p.a.

    Competitive low variable rates for borrowers with 30% deposit. Flexible home loan with no ongoing fees. Extra repayments and redraw available. Get a dedicated specialist for the loan application process.

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    Mozo Experts Choice 2021
    Liberate Variable Home Loan

    70-80% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.19% p.a. variable
    2.08% p.a.

    Fast online application with no fees. Free extra repayments and redraw facility. Min 20% deposit. Athena automatically lowers the rate as the loan is paid down. Winner of three Mozo Expert's Choice Awards for 2021.

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    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.95% p.a.
    fixed 3 years
    2.27% p.a.

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

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    Smart Home Loan 80

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.48% p.a. variable
    2.50% p.a.

    Low-rate variable home loan that could save you thousands. No ongoing fees. Unlimited extra repayments and free redraws. Maximum borrowing $1 million and at least a 20% deposit required.

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    Basic Home Loan

    Owner Occupier, LVR<60%, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    2.29% p.a. variable
    2.29% p.a.

    Competitive low variable rate. No application or account management fees. Flexibility to split your loan and set different repayment types. Fee free withdrawals of your savings.

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    Neat Home Loan

    Owner Occupier, Principal & Interest, LVR <60%

    interest rate
    comparison rate
    Initial monthly repayment
    2.19% p.a. variable
    2.20% p.a.

    Competitive variable rate. Borrowers choose their repayment schedule (weekly, fortnightly or monthly) Make extra repayments. Redraw facility available. Simple online application process. 40% deposit required.

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    Mozo Experts Choice 2021
    Fixed Rate Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a.
    fixed 3 years
    2.59% p.a.

    Competitive fixed rates across 1 to 5 year terms. No application fee or annual fee. Free extra repayments (up to $10,000 per year). Winner of Australia's Best Large Mutual Bank 2021.

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    Details
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    Discounted Home Value Loan

    Owner Occupier, Principal & Interest, LVR <70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.19% p.a. variable
    2.20% p.a.

    No ongoing service fees. Free unlimited extra repayments and online redraw facility.

    Compare
    Go to site
    Details
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    Discount Variable Home Loan

    Owner Occupier, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.54% p.a. variable
    2.59% p.a.

    No monthly administration fees. Ability to make extra repayments and redraws. A great low rate. No ongoing fees. Experience the difference this established bank has to offer.

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    Green Home Loan

    Owner Occupier

    interest rate
    comparison rate
    Initial monthly repayment
    2.08% p.a. variable
    2.36% p.a.

    Great low rate on investment loans when you package with your owner-occupied loan.

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    Details
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    Variable Home Loan

    Owner Occupier, Interest Only

    interest rate
    comparison rate
    Initial monthly repayment
    2.49% p.a. variable
    2.17% p.a.

    Refinance only. Super-fast digital application process. Zero upfront fees. No on-going service fees. Free 100% offset sub account. Comes with Visa debit card and the ability to use digital wallets; Apple and Google Pay. 25% deposit required.

    Compare
    Go to site
    Details

^See information about the Mozo Experts Choice Home loans Awards

*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.

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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Home loan interest ratesresources

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How are home loan interest rates calculated?

Interest rates are set by the Reserve Bank of Australia (RBA). The RBA meets on the first Tuesday of every month to announce whether the official cash rate will stay the same, increase or decrease, based on things like inflation, employment, economic growth and how much people are spending. The idea is that higher rates will slow borrowing and therefore economic activity and inflation and lower rates will do the opposite.

Lenders will then set their own home loan interest rates based on the RBA’s decision.

Types of home loan interest rates

The type of interest rate you pay on your home loan can affect how much you pay overall and each month. There are pros and cons to each type, so it’s important to take the time to find out which will suit you best. Your options include:

  • Fixed rate

A fixed home loan interest rate locks in your repayment amount at a certain value and will remain the same for a set time, usually up to 5 years. This makes budgeting easier, as you’ll have a set amount that you need to pay each month that won’t be affected by rate increases. 

The downside, however, is that if rates decrease while you’re on fixed term interest, you won’t reap any of the benefits. When your fixed term ends, you have the option to either enter into a new fixed rate or switch to variable rates.
In general, fixed interest rate loans are less flexible than other types of mortgage rates, and you could end up paying penalties if you repay the loan early.

  • Variable rate

A variable home loan interest rate means that your repayments might change at any time, based on changes to the cash rate or the whims of your bank. There’s less security in this type of interest rate - your repayments are subject to rises and falls in the market. 

However, it’s a popular type of home loan in Australia, as variable rates often sit lower than fixed rates. A variable interest rate might suit you if you're looking for flexibility, as you’ll have the option to make extra repayments and pay off your loan quicker.

  • Comparison rate

It can be hard to compare home loan rates sometimes. Aside from the interest rate, there might be extra fees and charges built into your home loan, which means the lowest headline interest rate might not always the best option. That’s where the comparison rate comes in.

The National Credit Code requires that lenders show comparison rates - which factor in interest, fees and charges - to give you a clearer idea of the true cost of a loan. So when you compare home loan interest rates on Mozo, you’ll see an interest rate plus a comparison rate for each product.

What is a comparison rate?

Keep in mind that comparison rates are a guide based on a secured loan of $150,000 over 25 years, with monthly principal and interest repayments. Different values or time frames on loans will mean different comparison rates. So while the comparison rates on our site are useful for choosing the best value home loan, to find out exactly how much interest you’ll be paying you'll need to check with your lender.

How are my home loan interest repayments calculated?

How much you pay each month will depend on numerous factors, including what type of rate you’re paying, how often your interest is calculated and how long your home loan term is for. One of the important factors in determining how your interest rates are calculated is whether your home loan is an interest only or principal and interest loan. Here’s the difference:

  • Interest only loans

With an interest only loan your monthly repayment consists of only the interest for the loan, and not the loan amount itself. The monthly savings can be significant if you’re not paying any of the principal loan amount, which might be a great short term solution if you’re running on a tight budget. The downside is that you won’t be making any progress toward actually owning your home.

Interest only loans are popular for investors, because they’re often counting on the value of the home increasing enough to sell the property, pay off the loan and make a profit.

Remember that you will eventually have to pay off the total loan amount, so while an interest only loan might be affordable in the short term, you should have a long term repayment plan in place.

  • Principal and interest loans

With a principal and interest loan, you’re paying interest, plus a part of the total loan amount each month. At the beginning of the loan, most of your repayment will go toward paying interest and a little will go toward the loan amount. As the principal amount gets lower, so does the interest you need to pay on it, so eventually, most of your monthly repayment will be going towards the principal, while a little goes to interest.

While you’ll be paying more each month than you would with an interest only loan, the good news is that by the end of your loan term, you’ll own your home entirely.
You can use Mozo’s home loan repayments calculator to see not only how much your monthly repayments would be with either an interest only or principal and interest home loan, but also how much total interest you would pay with each one.


Picture of Peter Marshall
Peter Marshall
Banking expert

Peter Marshall has been working in the Australian banking and finance industry for over 20 years and oversees Mozo’s extensive product database. He is regularly sought out for his expert commentary and analysis on banking and interest rates trends by print, radio and TV media.

FAQs about home loan interest rates

Got more questions about home loans? We’ve got answers. Below, we run through some key bits of info to help you understand home loan interest rates, and put you on the right track to find a home loan that suits you.

What is the comparison rate?

The comparison rate is designed to give you an accurate picture of how much each home loan might cost you by taking into account fees and any other extra charges, so don’t forget to use it.

What additional home loan features are there?

You have to weigh up the benefits and disadvantages to having extra features on your home loan. While some extras like an offset account, free extra repayments and repayment flexibility can save you money, others may not be so helpful and you generally pay a higher premium for a full features home loan. Take a careful look at the features being offered and decide if they are worth the extra cost. If you’re not sure exactly which feature might benefit you, check out Mozo’s guide to home loan features in a nutshell.

When is the interest calculated on my home loan?

Your interest might be calculated daily, monthly, quarterly or annually. Daily interest is best because it’s calculated as your principal loan reduces, and so you’ll pay less interest all up.  Annual interest, on the other hand, is calculated each day, but based on a yearly principal, which means it takes a whole year before you’ll pay less interest. If you’re on anything other than daily interest, try to time your monthly repayments to be before your interest is calculated, so you’ll be paying interest on the lowest principal possible.

Are home loan rates negotiable?

Banks don’t necessarily advertise the fact, but it is possible to negotiate a cheaper home loan rate. Success rates will vary depending on the specifics of the loan, but it’s always worth approaching your lender to see if they’ll budge. 

How can I reduce the amount of interest I pay?

The main goal for your home loan should be to pay as little interest as possible while remaining realistic about what monthly repayments you can afford to make. Here are a few tips and tricks to help you reduce the amount of interest you pay on your home loan:

  • Pay off your loan as quickly as possible. The quicker you can get rid of your loan, the less interest you will pay. But be careful, as sometimes, particularly with fixed term interest rates, you may be charged extra fees or penalties for paying off your loan before the complete term is finished.
  • Switch to a shorter term. If your lender allows it, you may want to look at a shorter loan term. This would mean you’ll pay more each month, so be sure to check your budget before going ahead, but it will save you money overall. So, say you had a loan of $150,000, at an interest rate of 3.98%. On a 25 year term, you’d pay $790 each month and a total of $87,030 in fees and interest. If you reduced that to a 20 year term, your monthly payments would increase to $907, but all up, you’d only pay $67,774.
  • Take advantage of free extra repayments. Again, you’ll need to check that there are no fees or penalties for overpaying, but this can be an effective way to quickly reduce your principal, and therefore pay less interest. If you’re budget allows for it, you can pay extra in lump sums or added to your monthly repayments to pay off your loan faster.
  • Use an offset account. An offset account is a bank account attached to your home loan. The balance you keep in this account is offset against the principal of your home loan to help you reduce the amount of interest you will pay. For example, if you had a home loan of $400,000 and $20,000 in your offset account, you’d only be paying interest on $380,000 of your loan. Think about getting your salary put into your offset account to get the most out of this feature.

How do I find the best home loan interest rate?

There are heaps of competitive home loan interest rates available and it’s worth the time to do some research and find a rate that suits your budget and lifestyle. To get you started, check out these great tools at Mozo:

  • Home loans comparison page - find out what home loan rates are currently on offer from hundreds of Australian financial institutes, from the big banks down to small online lenders and credit unions.
  • Home loans calculators - crunch the numbers on your home loan and find the answer to questions like ‘How will rate changes affect my repayments?’ and ‘How much can I afford to borrow?’
  • Home loan guides - we’ve got a guide on all the trickiest parts of home loans to help you through the process, all the way from deposits to refinancing.

You can also check out our handy interest rate guides for information on how interest rates work and help calculating what interest you'll pay on your home loan.

Home Loan Reviews

St.George Home Loan
Overall 1/10
Big No for Home Finance!!

Our broker suggested this bank due to its low interest rates. But, it turned out to be a biggest mistake. If a normal bank takes 2 weeks to process the document, this bank takes 2 to 3 months. No response from the branch. My wife waited for nearly 5 hours before getting a response on phone, but nothing productive. Never ever go for this bank for Home Financing.

Read full review

Our broker suggested this bank due to its low interest rates. But, it turned out to be a biggest mistake. If a normal bank takes 2 weeks to process the document, this bank takes 2 to 3 months. No response from the branch. My wife waited for nearly 5 hours before getting a response on phone, but nothing productive. Never ever go for this bank for Home Financing.

Price
8/10
Features
8/10
Customer service
1/10
Convenience
1/10
Trust
1/10
Less
Prashant, Queensland, reviewed about 5 hours ago
Pepper Money Home Loan
Overall 10/10
Easy to deal with

Everything has men made so easy for me with pepper money and if I need anything I just make a phone call and they answer promptly and are very helpful.

Read full review

Everything has men made so easy for me with pepper money and if I need anything I just make a phone call and they answer promptly and are very helpful.

Price
10/10
Features
10/10
Customer service
10/10
Convenience
10/10
Trust
10/10
Less
Graham, Queensland, reviewed 1 day ago
ME Home Loan
Overall 1/10
Under Staffed

Takes more than a month for a simple loan rate fix. They then fix the wrong loan with wrong rate. They tried to renege on the phone call that was made to fix the rate. You can never speak to a supervisor. Thank goodness for the AFCA Ombudsman.

Read full review

Takes more than a month for a simple loan rate fix. They then fix the wrong loan with wrong rate. They tried to renege on the phone call that was made to fix the rate. You can never speak to a supervisor. Thank goodness for the AFCA Ombudsman.

Price
1/10
Features
1/10
Customer service
1/10
Convenience
1/10
Trust
1/10
Less
Michael, Western Australia, reviewed 4 days ago
See
Home loan tips

Whether you’re after the lates home reno trends, money-saving tips or cheapest home loan deals, Mozo’s moneyvators have it covered. Check out our collection of money savvy articles and top tips.

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Home loan providers

Find the right home lender fast. Mozo details all home loan providers along with their home loan products right here so you compare rate, fees and features easily.

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