Cheap home loans: expert picks for August
Key points
- The lowest variable rate in our database is 4.99% p.a. (5.04% p.a. comparison rate*) from Police Credit Union.
- This marks the first time we’ve seen a variable rate fall below 5.00% p.a. this year.
- Switching from the average Big Four variable rate to the cheapest variable in our database could save you $409 a month.
- The lowest fixed rate in our database is 4.74% p.a. (5.58% p.a. comparison rate*) from Bank Australia, but it comes with conditions of building a green home.
There’s at least two more rate cut expected this year, which is driving competition between the big banks, customer-owned alternatives and online-only lenders, putting downward pressure on interest rates.
This helps to give you plenty of choice when it comes to choosing a cheap home loan. And every dollar that you can save on your mortgage is more money in your pocket, so why not be savvy?
We’ve selected our top picks below, or you can continue to compare all home loans from our database.
Cheap home loans: our picks
Here’s some of the top deals we’ve reviewed that are well below the average rate and could save you hundreds of dollars on your repayments every year.
Variable rate home loans
Unloan Variable Home Loan
- Variable rate from 5.24% p.a. (5.15% p.a. comparison rate*)
- Loyalty discount every year for up to 30 years
- Mozo Experts Choice Awards winner 2023, 2024 & 2025^ for Low Cost Home Loan
- No offset account
Why it made our list
In addition to its already low rate of 5.24% p.a (5.15% comparison rate*), Unloan’s unique feature is that it’s the only home loan that comes with an automatic loyalty discount. For every year you’re paying off your mortgage, Unloan will knock 0.01% p.a. off your interest rate every year for up to 30 years.
While it’s missing an offset account, it does allow for free extra repayments, so Unloan’s competitive rate, annual discount and the fact that it has won a Mozo Experts Choice Award for Low Cost Home Loan for three years running makes it worthy of a place on the cheap home loan shortlist.
ME Basic Variable Home Loan
- From 5.63% p.a. variable rate (5.65% comparison rate*)
- No application and no monthly account fees
- $3,000 cashback if refinancing to ME
- No offset account
Why this made our list
This is a home loan with all the key basics: a low variable rate, no monthly fees and fee-free redraw (min $500 withdrawal). To qualify for the 5.63% variable rate (5.65% comparison rate*) you’ll need at least 20% deposit or equity and have a loan amount of $150,000 or more. While this loan doesn’t have an offset account, you can make extra repayments and take advantage of the free redraw. There is no application or monthly fees but the loan has a $200 valuation and $250 settlement fee. If you’re refinancing to ME from another lender there’s a $3,000 cash back deal (loan size must be over $700K and maximum LVR of 80%). Other T&Cs apply.
Virgin Money Loaded Home Loan
- Variable rate from 5.59% p.a. (5.88% p.a. comparison rate*)
- Earn Virgin Money Points at settlement and every month
- 100% interest offset across up to 10 Go accounts
- $295 annual fee
Why this made our list
As the name suggests, this home loan comes loaded with great features from earning rewards points for paying off your loan that you can spend on everything from shopping, cashback and flights, to the 100% interest offset which can help you to save on interest repayments as funds in Go accounts will offset interest payable (up to 10 accounts). You can earn 2,000 Virgin Money points for every $10,000 borrowed at settlement plus score a repayment reward of 2000 points every month - as long as you’re not behind on your repayments (T&Cs apply). Interest rates will vary depending on your loan to value ratio with the best variable rates available for a LVR of 60% or less at 5.59% p.a. (5.88% p.a. comparison rate*). There’s a $295 annual fee and a $150 loan settlement fee to consider. Virgin Money cover valuation costs up to $300.
Greater Bank Discount Great Rate Home Loan
- Variable rate from 5.49% p.a. (5.50% p.a. comparison rate*)
- Get up to $3,000 cashback when you apply online (T&Cs apply)
- Mozo Experts Choice Awards winner for Low Cost Home Loan in 2025^
- No offset account
Why it made our list
Greater Bank has one of the most competitive variable rates in our database at 5.49% p.a. (5.50% p.a. comparison rate*), and it also won a Mozo Experts Choice Award for Low Cost Home Loan.
Sweetening the deal is Greater’s cashback offer, which can land you up to $3,000 back in your pocket when you apply for this loan online (T&Cs apply).
There’s no offset account with this loan, but you’re able to make extra repayments and can redraw those funds at any time. There are no ongoing fees, but you will need to pay a $180 application fee.
Loans.com.au Variable Home Loan 90
- Variable rate from 5.54% p.a. (5.58% p.a. comparison rate*)
- Mozo’s Experts Choice Awards 2025^ First Home Buyer Loan winner
- No application fees to pay
- Optional offset account costs extra
Why it made our list
You can borrow up to 90% with Loans.com.au and still get a competitive interest rate of 5.54% p.a. (5.58% p.a. comparison rate*) – that’s better than the average for those with small deposits of 10%, making it a compelling option for first home buyers.
No application or ongoing fees also help to reduce your costs, but you can expect the fairly standard settlement fee and applicable government fees. On the plus side, any additional repayments you make on your home loan can be redrawn at no extra cost.
Fixed rate home loans
BOQ Discount Fixed Rate Home Loan
- 4.89% p.a. for 2 years (5.62% comparison rate*)
- $2,000 cashback for new loans refinanced from another lender until 30 September 2025 (T&Cs apply)
- Up to $10,000 extra repayments annually
- $10 monthly fee
Why it made our list
Want the certainty of fixed repayments, but with a bit of extra flexibility? BOQ’s Discount Fixed Rate Home Loan lets you lock in a rate for two to five years, with the 2 year rate a sharp 4.89% p.a. interest rate (5.62% p.a. comparison rate*) that ranks among the lowest in our database for borrowers with at least 20% deposit or equity. You can still make up to $10,000 in extra repayments each year and choose a repayment schedule that works for you. Refinance from another lender by 30 September 2025 and you can pocket $2,000 cash back (T&Cs apply). There’s no application fee, but there is a $150 settlement fee and an ongoing $10 monthly service fee to keep in mind.
SWS Bank Premium 'Special' 3 Year Fixed Rate
- 4.99% p.a. for 3 years (5.79% p.a. comparison rate*)
- Extra repayments up to $20,000 each year
- Free redraw facility
- No establishment or monthly fees
- Minimum loan amount of $800,000
Why it made our list
SWS Bank is offering one of the lowest fixed rates currently available at 4.99% p.a. for 3 years. Keep in mind that once this fixed period ends, you’ll roll onto a variable rate – currently sitting at 6.10% p.a. (6.10% p.a. comparison rate*) – so you may want to negotiate a better deal at this time, or consider refinancing your mortgage.
One drawback of this excellent rate is that it’s only available for loan amounts of $800,000 or more, but if you fall into this category, it’s a compelling option. Its lack of establishment and monthly fees, as well as the ability to make extra repayments worth up to $20,000 every year without penalty also adds to the appeal.
IMB Bank Fixed Rate Home Loan (2 years)
- 5.09% p.a. for 2 years (5.69% p.a. comparison rate*)
- Available with deposits of just 5%
- Up to $4,000 cashback available
- $6 monthly fee
- LVR of 80% or less required for cashback
Why it made our list
IMB Bank is offering up to $4,000 cashback when you take out a new loan or refinance with the bank, which is one of the highest cashback offers in our database. To be eligible, your home loan amount must be $750,000 or more, with an LVR of 80% or less.
You’ll only need a deposit of at least 5% to secure this interest rate, which could be a drawcard for first home buyers, though it means those with higher deposits won’t benefit from a lower rate.
What makes a home loan cheap?
A good benchmark for determining whether a home loan’s rate is low or cheap is to see how it stacks up against the average.
Here’s the current variable and fixed average rates in our database.
- Average variable rate: 6.15% p.a.
- Average two-year fixed rate: 5.42% p.a.
Source: Mozo database on 4 August, 2025. Average home loan interest rates for an owner occupier with <80% LVR, making principal and interest repayments over 25 years on a $500,000 home loan.
Lowest variable rate vs the average
Now let’s see the difference between the average variable interest rate versus the lowest variable interest rate in our database which is 4.99% p.a. (5.04% p.a. comparison rate*) from Police Credit Union.
| Interest rate (p.a.) | Monthly repayment | Interest over 25 years | Potential savings (over 25 years) | |
|---|---|---|---|---|
| Average Big Four variable | 6.35% | $3,329 | $498,796 | $0 |
| Average variable (overall) | 6.15% | $3,268 | $480,252 | $18,544 |
| Lowest variable | 4.99% | $2,920 | $376,011 | $122,785 |
| Source: Mozo database on 4 August, 2025. Rates are for an owner occupier with <80% LVR, making principal and interest repayments over 25 years on a $500,000 home loan. | ||||
What else to consider when choosing a low cost home loan
Fees and charges
A low interest rate is essential when choosing a cheap home loan, but it’s not the only factor you should consider – fees are also important.
For example, you may find you’re better off with a slightly higher interest rate with no fees attached, rather than a cheaper interest rate that comes with a monthly or annual fee.
| Interest rate (p.a.) | Ongoing fee | Interest + fees over 25 years | Difference | |
|---|---|---|---|---|
| Option 1 (annual fee) | 6.05% | $395 | $480,917 | |
| Option 2 (monthly fee) | 6.05% | $30 | $480,042 | -$875 |
| Option 3 (without fee) | 6.10% | $0 | $475,642 | -$4,400 |
| Source: Mozo database. Rates are for an owner occupier with <80% LVR, making principal and interest repayments over 25 years on a $500,000 home loan. | ||||
You don’t need to do any complex calculations to work out the total cost of your mortgage’s interest rate and fees, you can simply use our home loan comparison calculator.
The comparison rate
The comparison rate gives you an indication of the true cost of a home loan at a glance.
It takes the interest rate along with some fees and charges, and combines them into one percentage figure, so you can compare home loans across different lenders a little easier.
Lenders are required to display the comparison rate next to the interest rate, so if these two numbers are quite different, you’ll know instantly that there’s fees attached to the loan.
Prefer to speak with a broker?
Cheap home loans: FAQs
Which bank has the cheapest home loans?
Interest rates change all the time, so there isn’t one bank that has the cheapest home loans for all borrowers. On 4 August, 2025, the provider with the lowest variable rate with no conditions is Police Credit Union at 4.99% p.a. (5.04% p.a. comparison rate*)
Do the major banks have cheap home loans?
The Big Four banks don’t typically offer the lowest interest rates, but if you are looking for their cheapest rates, you’ll want to consider digital-only offers from the major players. For example, Commonwealth Bank’s Digi Home Loan is the lowest variable rate from CommBank, while ANZ’s online-only brand, ANZ Plus, offers lower rates than ANZ.
Is it cheaper to get a fixed or variable home loan?
Whether a fixed or variable rate will be cheaper for you depends on your financial situation.
Providers often have competitive fixed rate loans which can save you from the worry of your repayments fluctuating during the fixed period. Variable rates are linked to the market and this means that if there are rate cuts you can benefit from them, which will make your home loan repayments cheaper.
Many lenders offer borrowers the option to split their home loan. This means that a portion of the loan is fixed and a portion of the loan is variable so you can get the best of both worlds.
* 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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