Want a cheaper home loan? Online lenders are where it’s at

Gone are the days when Aussies would only take out a home loan with a big bank, as there are now a great range of online only lenders offering some of the lowest rates in the market, which could potentially save you thousands, if not tens of thousands over the life of the loan.

You might be wondering “who are these online lenders?” and “are they really trustworthy?” That’s where our guide comes in. We’ll give you a full run-down of the kinds of lenders out there, and break down just how much you could save by making the switch to an online lender.

Home Loan Comparison Table - rates updated daily

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

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

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a.variable for 12 months and then 2.48% p.a. variable
    2.47% p.a.

    A super low introductory rate home loan with no monthly or ongoing fees. Unlimited free redraws and unlimited additional repayments to help you build your equity and own your home sooner. Multiple loan splits available. (Rates revert after introductory period ends). 20% minimum deposit required. Winner of two Mozo Expert's Choice Award for 2021.

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    Details
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    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.75% p.a.
    fixed 3 years
    2.22% 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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    Details
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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
    2.43% p.a.

    Get a flexible loan structure with up to six loan accounts with different rate types. Make free extra repayments. Enjoy free redraw facility. No upfront or ongoing fees. Option to earn Qantas points.

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    Details
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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
    2.19% p.a. variable
    2.19% p.a.

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

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    Details
  • Hot Deal$3,000 cashback when you refinance with Virgin Money (T&Cs apply)
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    Special Offer Reward Me Fixed Rate Home Loan

    Owner Occupier, LVR <80%, 300k+

    interest rate
    comparison rate
    Initial monthly repayment
    1.94% p.a.
    fixed 2 years
    2.77% 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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    Details

Credit Unions, Mutuals, Non-Bank Lenders, what's the difference? 

Before you sign up with an online lender you probably want to know exactly what they are about. Here’s a quick overview of the different players in the home loan market and who they are suited to:

Lender type Best for
Credit Unions & Mutuals Borrowers who want to be treated like a real customer not a number & be part of an organisation that gives back to members not just shareholders.
Non-Bank & Online lender Online-natives who want the sharpest rate and don’t mind a bit of DIY to get it
Small Bank lender Those looking for the security of borrowing from a bank but a more personal level of service and competitive rates.
Big 4 Bank Best for more complicated loans or large loan amounts or for existing Big 4 customers who want all their banking in one place.

Are online home loan lenders trustworthy?

There are lending benchmarks that all lenders must adhere to that have been set by the Australian Securities and Investments Commission (ASIC) aimed at protecting you as a borrower, which include obligations like “acting efficiently honestly and fairly”.

When deciding if a home loan lender is trustworthy, your best bet is to read reviews from customers just like you by visiting our rate and review section.

How much can an online lender save me?

Refinancing your current home loan to an online only lender could potentially save you thousands, as online lenders don’t have the same overheads as the majors like paying dividends back to shareholders.

When we crunched the numbers we found a borrower could save $3,168* a year by switching from the average Big 4 home loan to an online lender - money that’s better off in your bank than theirs!

To give you an idea of how much you could save on your monthly repayments here’s a comparison of the average rates against five of the best, using the example of a $400,000 home loan paid back over 25 years:

Home loanRateLender typeMonthly repayments
Avg variable3.72% p.a.N/A$2,050
Avg Big 43.98% p.a.Bank$2,107
HomeStar Star Essentials Home Loan2.74% p.a. (2.77% p.a. comparison rate*)Online$1,843
Loans.com.au Smart Home Loan2.88% p.a. 2.90% p.a. comparison rate*)Online$1,872
Mortgage House Red Home Home Loan - Early Bird Special2.89% p.a. (2.93% p.a. comparison rate*)Online$1,874
Athena Variable Home Loan2.84% p.a. (2.80% p.a. comparison rate*)Online$1,864
Reduce Home Loans Rate Buster High Lend Variable Home Loan2.77% p.a. (2.78% p.a. comparison rate*)Online$1,849

Information accurate as of 17 January 2020 

As the table above shows, your ongoing repayments will be significantly lower if you go for one of the low rate deals that are under 3% currently available in the home loan market.

How do I find an online lender?

Online of course! Simply enter your details into our home loan comparison tool and our search engine will reveal some of the lowest rate and fee loans available in the market for your situation.

Is it difficult to apply for a home loan with an online lender?

Applying is easy, all you need is a few hours to gather all your documentation and get clicking. Some of the paperwork you may need includes:

  • PAYG income verification
  • Employer consent form
  • Credit card and personal loan statements
  • Bank and savings account statements 
  • ID documents
  • Home loan statements for current loan
  • Council rates notice or certificate of title

Keep in mind, the above documents are a general guide of what you may need to upload when refinancing to an online lender but you’ll need to check with the lender for specific requirements.

*Savings figure is based on switching a $400,000, 80% LVR, 25 year P&I loan from the average Big 4 variable home loan rate of 3.98% to the lowest variable rate available from online lender, Homestar 2.74% (2.77% comparison rate*). 

*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, loan amount and term entered. 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 Loans Awards

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