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

Collage of people in different houses comparing home loan interest rates.

Gone are the days when Aussies would only take out a home loan with a big bank. Now, there's no shortage of smaller online lenders offering some of the lowest rates in the market, which could potentially save you thousands over the life of your loan.

You might be wondering who these online lenders are and if they’re 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 discuss just how much you could save by making the switch to an online lender.

RELATED: Home loan rate check - how do the big four banks compare?

Loan details

Rate change

Repayment change if rates go up

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 would suit:

Lender type Good for
Credit unions & Mutuals Borrowers who want to 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 More complicated loans or large loan amounts, along with existing Big 4 customers who want all their banking in one place.

Are online home loan lenders trustworthy?

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

When deciding if a home loan lender is trustworthy, you can get an idea by reading reviews from other customers at our rate and review section. Just keep in mind that every lender has

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 have fewer overheads than the majors and generally don’t have to pay dividends back to shareholders.

When we crunched the numbers we found a borrower could save $107,226* over the life of your loan by switching from the Big 4 variable average 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 average rates against four of the best in the Mozo database, using the example of a $400,000 home loan paid back over 20 years and our mortgage repayment calculator.

Home loanRateLender typeMonthly repayments
Avg variable3.48% p.aN/A$2,316
Avg Big 44.21% p.a.Bank$2,468
Reduce Home Loans Super Saver Variable1.99% p.a. (2.06% p.a. comparison rate*)
Online$2,022
Tic:Toc Variable Home Loan2.09% p.a. (2.10% p.a. comparison rate*)Online$2,041
Well Money Well Balanced Home Loan2.10% p.a. (2.13% p.a. comparison rate*)Online$2,043
Yard Variable Home Loan Special2.74% p.a. (2.76% p.a. comparison rate*)Online$2,167

Information accurate as of 22 June 2022.

As the table above shows, your ongoing repayments will be significantly lower if you go for one of the low rate deals 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’ll likely 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.

Keen on switching to lower interest rate? Compare low interest home loans below.

*Based on owner-occupier making principal and interest repayments for a home loan with an LVR < 80% and $400,000 remaining value. Averages sourced from the Mozo Marketview database.

Compare low interest home loans - last updated 13 August 2022

Search promoted home loans below or do a full Mozo database search . Advertiser disclosure
  • Unloan Variable

    Owner Occupier, Refinance Only

    interest rate
    comparison rate
    Initial monthly repayment
    3.14% p.a. variable
    3.06% p.a.

    For refinancers only. 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 in as little as 10 minutes.

    Details
  • Smart Booster Home Loan

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

    interest rate
    comparison rate
    Initial monthly repayment
    3.60% p.a.variable for 24 months and then 4.00% p.a. variable
    3.96% p.a.

    Already includes July RBA rate increase. 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.

    Details
  • Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    3.79% p.a. variable
    3.79% 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.

    Details
  • PAYG Home Loan

    Owner Occupier, Principal & Interest, LVR<80%

    interest rate
    comparison rate
    Initial monthly repayment
    3.29% p.a. variable
    3.33% p.a.

    Low variable rate. Ideal for new home buyers or refinancers. Unlimited additional repayments. Unlimited free redraw. Application completely online. Optional 100% offset can be added for $120 p.a.. 20% deposit required.

    Details

* 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 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.