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. Nowadays, there’s no shortage of online lenders offering some of the lowest rates in the market, helping Australians save thousands, if not tens of thousands over the life of their loans.

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.

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

    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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    Details
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    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.
    fixed 3 years
    2.24% 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
    2.32% 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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    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
    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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    Details
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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

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) that all lenders must adhere to. These 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 $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’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.

*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 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.