Home loan comparisons for Australian borrowers
Four comparisons shape most Australian home loan decisions. No option is preferred by default and no ranking is sponsored. Each comparison sets out the trade-offs in a single table, with a calculator for testing individual figures where one is available.
Fixed rate vs variable rate home loans
The first structural decision for most home loans is the choice between repayment certainty and flexibility.
| Criterion | Fixed | Variable |
|---|---|---|
| Repayment certainty | Repayments are fixed for the term | Repayments move with the market |
| If rates fall | The original fixed rate continues to apply | The rate usually falls as well |
| Extra repayments | Capped, often ~$10k/year | Usually unlimited |
| Offset & redraw | Rare or partial | Standard on most loans |
| Exiting early | Break costs, which can amount to thousands of dollars | Small or no discharge fee |
A common approach is to fix the portion of the loan on which repayment certainty is required and to keep the remainder variable, retaining access to an offset account and extra repayments. Fixing the entire loan is best understood as a decision to secure certainty rather than a view on the direction of the market.
Open the fixed vs variable calculatorOffset account vs redraw facility
Both features apply surplus cash against loan interest. They differ in how readily the funds can be accessed and in how they suit different savings habits.
| Criterion | Offset account | Redraw facility |
|---|---|---|
| How it works | Separate account; the balance offsets the loan daily | Extra repayments are held inside the loan |
| Access to the money | Immediate, as it is a transaction account | Withdrawal request, sometimes with minimums |
| Interest saving | Identical for the same balance | Identical for the same balance |
| Cost | Often a package fee (~$10 to $400/yr) | Usually free |
| Tax nuance (investors) | Preserves deductibility of the loan | Redrawing can complicate deductibility |
The interest calculation is the same for both; the difference lies in how the funds are used. An offset account suits borrowers who want their money visible and immediately available, while a redraw facility suits borrowers who prefer funds to be slightly less accessible. Investors generally favour an offset account because it preserves the deductibility of the loan.
Open the offset account calculatorBig four banks vs digital and non-bank lenders
This comparison sets the full-service major banks against lower-cost digital and non-bank lenders that typically advertise lower rates.
| Criterion | Big four bank | Digital / non-bank |
|---|---|---|
| Advertised rates | Higher, but substantially negotiable | Lower without negotiation |
| Branches & cash | Full network | App and phone only |
| Complex situations | Broad credit policies, more exceptions | Narrower policies focused on straightforward applications |
| Approval speed | Days to weeks | Often days |
| Products & features | Full suite, packages, offsets | Simpler product ranges, sometimes no offset |
For borrowers with standard salaried income and a straightforward purchase, digital and non-bank lenders are difficult to better on price. For borrowers with complex income, a small deposit or an unusual property, the policy flexibility of a major bank may justify the higher margin, provided the rate is negotiated rather than accepted at the advertised level.
View Australian home loan lender profilesMortgage broker vs applying directly to a bank
This comparison considers who researches the market on the borrower's behalf and the legal duties that apply to each party.
| Criterion | Mortgage broker | Direct to bank |
|---|---|---|
| Choice | 30+ lenders compared | One lender's product range |
| Legal duty | Best Interests Duty: must act in the borrower's interests | No equivalent duty to the borrower |
| Cost to the borrower | Free (lender pays commission) | Free |
| Negotiation | Broker negotiates below advertised rates | The borrower negotiates alone |
| Approval odds | Matched to a suitable credit policy first | Policy fit is unknown until an application is assessed |
Applying directly can work well for borrowers who have already researched the whole market and whose circumstances are simple. For other borrowers, a broker costs the same, that is, nothing, while offering a legally mandated duty to the borrower and a wider range of lenders. This is why most new Australian home loans are now arranged through a broker.
Request a free assessmentCompare lenders against your own circumstances
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