Buying a home is one of the biggest financial steps most Australians will ever take. For many, it isn’t possible to pay for a property outright.
This detailed guide will detail everything you need to know about home loans in Australia. That way, you can compare lenders, select the right loan, and make informed decisions during the home purchasing process.
A home loan is a financial product provided by a bank or lender that allows you to borrow money to purchase property. The loan is secured against the property itself, meaning if you fail to keep up with repayments, the lender has the right to sell the property to recover the debt..
Home loans in Australia typically feature:
A key concept to understand is equity—the difference between the market value of your property and the amount you still owe on your loan. Building equity over time can open opportunities for refinancing, renovations, or even using your home as an investment tool.
The Australian home loan system is influenced heavily by the Reserve Bank of Australia (RBA). When the RBA changes the cash rate, banks and lenders adjust their interest rates accordingly. This means borrowers can experience shifts in repayment amounts depending on the economy.
There are three main sources of home loans in Australia:
Another important factor in Australia’s home loan market is government intervention. Programs like the First Home Loan Deposit Scheme (FHLDS) and First Home Owner Grant (FHOG) are designed to help first-time buyers enter the market sooner with smaller deposits and reduced upfront costs.
In short, the Australian home loan market is a mix of global economic pressures, local property values, and government policies—all of which can have a direct impact on your borrowing power and repayment strategy.
Australia has several types of home loans available to residents.
But the challenge to the borrower, lies in choosing a loan that’ll suit your goals in an efficient manner. Below is an overview of the major home loans types in Australia.
These are loans with interest rates that fluctuate to mirror the market. Most times, these numbers are impacted by the Reserve Bank of Australia’s (RBA) cash rate.
Pros
Cons
A fixed-rate home loan locks in your interest rates for a select timeline, usually between one and five years.
Pros
Cons
A split home loan is one that allows you to divide your loan into different parts. While a portion of the loan could have variable interest rate, the remaining can feature fixed interest rates.
Pros
Cons
On an interest-only home loan, the repayments you make will only cover the interest tied to the amount borrowed. This occurs for a select timeline, usually up to five years.
But there’s a kicker. When the interest-only period elapses, the loan transforms into a “principal and interest” At this point, you’d start repaying the principal alongside its interest. This usually leads to higher repayments.
Pros
Cons
Low-deposit home loans (first home guarantee) are mortgages available to borrowers that can make a deposit of at least 5%. On the other hand, no-deposit loans are usually called mortgages without a deposit. Why? Because borrowers can collect them without making a deposit. However, they’d need a guarantor to get it.
Pros
Cons
A guarantor home loan is one where a guarantor (usually a relative) offers up their property’s equity as extra security on your loan.
Pros
Cons
The homeowner construction loan is one designed for building or renovating properties. Unlike regular home loans, funds tied to a construction loan aren’t released in one go. Rather, they’re disbursed in parts as the construction or renovation progresses.
Pros
Cons
When choosing a home loan, selecting the right lender is just as important as choosing the right loan type. In Australia, borrowers have access to a wide range of providers, each offering unique benefits.
Australia’s Big Four Banks—Commonwealth Bank, Westpac, NAB, and ANZ—dominate the market. They offer stability, brand trust, and a wide range of loan products. However, their rates are not always the most competitive.
Non-bank lenders, such as credit unions, building societies, and online lenders, often provide lower rates and flexible conditions, especially for borrowers with non-traditional circumstances.
Mortgage brokers act as intermediaries between you and lenders. They can compare dozens of loan products and help you find one tailored to your financial needs. Many Australians use brokers, especially first-home buyers, as they simplify the process and may secure deals not advertised directly by banks.
The rise of fintech and online lenders has transformed the Australian mortgage market. Many digital-only lenders offer fast approvals, lower fees, and competitive rates thanks to reduced overhead costs. These can be an excellent choice for tech-savvy borrowers comfortable with online-only service.
* This should be considered a rough guide, and the actual loan offerings may be subject to further scrutiny.
When choosing a home loan, selecting the right lender is just as important as choosing the right loan type. In Australia, borrowers have access to a wide range of providers, each offering unique benefits.
The First Home Owner Grant is a popular grant for first-time home buyers in Australia. Buyers who qualify for it will get up to $10,000 to buy or build a home.
It gets better. In Western Australia, stamp duty isn’t added to vacant lands valued at $350,000. In most Australian states, established homes of up to $500,000 are exempted from stamp duties.
Stamp duty exceptions don’t end here though. If you buy a land and build on it later, stamp duty placed on the land might be refunded.
The First Home Guarantee initiative gives Aussies the chance to own a home with just a 5% deposit of the property’s total value. This first home buyers scheme can settle up to 15% of the property’s worth. This allows buyers to enter the market without difficulties.
And from the 1st of October 2025, property and income price caps will be removed. While a 5% deposit will still be required, prospective homeowners will be able to avoid LMI.
Lenders Mortgage Insurance (LMI) can get costly when buying a property. However, professionals like doctors, and accountants can enjoy an LMI waiver when they deposit 10% of the property’s value. With this incentive, these pros can save more when purchasing a home.
Applying for a home loan is one of the biggest financial steps most Australians will take, and while the options can feel overwhelming, the process doesn’t need to be complicated.
A home loan isn’t just about borrowing money—it’s about finding the right structure to support both your lifestyle and long-term goals.
Working with a mortgage broker like Your Future Set means having someone who looks at the bigger picture, guiding you through the process and helping you secure a loan that truly fits your needs.
Book a call:
Select a convenient time using our online calendar to schedule a 15-minute chat with one of our expert mortgage brokers. This initial conversation will help us understand your needs and how we can help you secure the best home loan.
Have a solutions-focused appointment:
After the initial chat, we’ll set up a second, more in-depth appointment to explore mortgage options tailored specifically to your needs. We’ll present solutions that match your financial goals, putting you on the path to homeownership.
Submit Your Paper Work:
Once you’re happy with the plan, we’ll request a few key documents. Your broker will take it from there, submitting everything to the banks and ensuring the loan process moves forward smoothly.
Complete a quick insight from (optional)
To save time during the call, you can fill out a short client insight form beforehand, we’ll send it through to you. This allows us to jump straight into finding solutions that fit your goals.
Lenders consider several factors before approving a loan. This includes your credit history, income, savings, and existing debts. A strong credit score (661 and above) can improve your chances of approval and help you access lower interest rates. However, even if your score isn’t perfect, Your Future Set can explore options with a range of lenders and guide you toward the right solution for your circumstances.
The interest rate of a loan gives you insight into how much you’d need to pay over time.
Understanding how Australian lending rates fluctuate is crucial for making informed decisions about refinancing or selecting the optimal loan structure.
Fixed rates offer stability, making them useful for borrowers who want predictable repayments and easier budgeting, though they can come with break costs if you refinance or repay early.
With this in mind, as a general rule of thumb fixed rates often suit borrowers who value stability—like young families managing tight budgets or anyone wanting predictable repayments during uncertain times.
Variable rates provide greater flexibility, often allowing extra repayments, redraw facilities, and offset accounts, but they also mean your repayments can rise if interest rates go up.
Variable rates may work well for borrowers who are comfortable with some movement in their repayments, such as those with flexible income or a goal to make extra repayments and pay down their loan faster.
A split loan can be a good middle ground, appealing to borrowers who want the security of fixed repayments on part of their loan while keeping the flexibility of a variable portion for extra repayments or offset features.
Australian lending rates are closely tied to the decisions of the Reserve Bank of Australia (RBA).
The RBA sets the official cash rate, which influences how much it costs banks to borrow from one another.
When the cash rate changes, lenders typically pass those changes on to borrowers, meaning the interest you pay on your home loan can rise or fall in response.
Cash rate changes affect borrowers who took out a variable-rate or split loan. If you’re among this set and wouldn’t want rate fluctuations to affect you in the long run, consider these tips:
In this section, we’ll explore how refinancing works, its potential benefits and risks, and when it may be worth considering. For a deeper dive, you can also visit our dedicated home refinancing in Australia page for more detailed insights.
Home loan refinancing is the process of replacing your current loan with a new one, often to take advantage of a lower interest rate, ex more flexible features, or a structure that better suits your circumstances.
When it comes to refinancing, it’s worth reviewing your options whenever interest rates change—whether they’re rising or falling. Even small shifts can impact your repayments, so speaking with a mortgage broker can help you understand if refinancing makes sense in your situation.
It’s also a good idea to connect with a broker if your financial circumstances change, whether that’s an improvement in your credit score and equity or a new challenge like reduced income or higher expenses. Having expert guidance ensures your loan continues to work for you, whatever the circumstances.
Refinancing can also provide access to home equity. As you pay down your mortgage and your property increases in value, you build equity that can be unlocked through refinancing.
This equity may be used for renovations, purchasing a second property, or other personal financial goals.
One of the main advantages of refinancing is the potential to secure a lower interest rate. Even a small drop can make a big difference over the life of a loan, reducing the total interest paid and freeing up extra room in the household budget.
Another key benefit of refinancing is the opportunity to lower your monthly repayments. By consolidating higher-interest debts such as personal loans or credit cards into your home loan—or by switching to a more competitive rate or longer loan term—many borrowers find they can ease financial pressure and create more flexibility in their monthly budget.
In summary the benefits might include:
While refinancing can deliver benefits, it’s not without potential drawbacks. One consideration is that refinancing can sometimes lead to an extended loan timeline. For example, resetting a 25-year loan term back to 30 years may lower repayments now, but could mean paying more interest overall.
There are also costs involved in refinancing. Application fees, property valuations, and discharge fees from your current lender can add up. It’s important to weigh these costs against the potential savings to make sure refinancing is worthwhile.
Finally, while most borrowers refinance to lower their rate, there’s a risk of ending up with higher interest costs in the long run. This may happen if a borrower extends their loan term significantly or if rates rise after refinancing into a variable product.
In summary the risks might include:
The good news is that many of these risks can be reduced—or even avoided—by planning your refinance carefully with a mortgage broker. Timing plays an important role, as refinancing when rates, fees, and loan conditions align can help you secure real savings without extending your loan unnecessarily.
A broker like Your Future Set can help you assess the full picture, comparing costs, repayment options, and lender terms to ensure your new loan structure supports your long-term goals rather than setting you back.
If you are interested in refinancing to save on your mortgage you might be interested in this split loan calculator from the MFAA
Renovating your home can increase its appeal and value. Here’s how you can go about it using equity and loans as weapons.
For property owners—especially those managing multiple loans—the way a mortgage is structured can have a big impact on long-term outcomes.
Unfortunately, many borrowers end up in inefficient loan setups simply because their broker and accountant haven’t aligned their strategies. This lack of coordination can create unnecessary costs, limit flexibility, and hold back future opportunities.
The most effective loan structure isn’t one-size-fits-all. It depends on your financial position, goals, and appetite for risk.
For some, that might mean prioritising cash flow and flexible repayment options. For others, it may be about planning for tax efficiency or setting up access to equity for future investment or renovation opportunities.
That’s why it’s so important to have open communication between your mortgage broker and accountant.
When these professionals collaborate, you gain a structure that’s not just about today’s loan approval, but about supporting what matters most to you—whether that’s stability for your family, growing your property portfolio, or achieving long-term financial freedom.
At Your Future Set, we work alongside your other advisers to help ensure your loan is structured in a way that supports your bigger picture.
When reviewing your loan structure, it’s worth asking yourself:
Flexibility & Repayments
Can I make extra repayments without penalty?
Do I have access to a redraw facility or offset account to reduce interest costs?
Future Planning
Does my loan give me access to equity if I need funds for renovations or another property purchase?
Is my loan structured in a way that supports both my current needs and long-term financial goals?
Multiple Loans
If I have more than one property, are my loans structured to maximise flexibility and efficiency?
Are my loans cross-collateralised, and if so, is that the best setup for me?
Professional Alignment
Has my broker worked in tandem with my accountant to align my loan structure with my financial strategy?
Do I feel confident that my loan supports my goals around cash flow, tax efficiency, or wealth-building?
Safeguarding your home with the right insurance plan and other risk strategies is vital to protect your property and finances.
Most lenders require proof of home insurance before settlement, as it protects the structure of the property and its fixtures. Contents insurance can also cover personal belongings inside the home against events like theft, fire, or storm damage.
For apartment owners, strata insurance is usually arranged by the body corporate to cover shared areas such as the roof, lifts, and common spaces. However, this doesn’t extend to personal belongings or internal fixtures, so homeowners may still need their own contents policy.
Mortgage protection insurance is designed to cover your loan repayments if you’re unable to work due to illness, injury, or unexpected unemployment. While not mandatory, it can provide peace of mind for borrowers who want added security against the risk of defaulting on their loan.
Insurance isn’t the only way to protect yourself. Having an emergency fund or savings buffer can help manage surprise costs such as urgent repairs, medical bills, or job loss. Even setting aside a small amount regularly can provide valuable reassurance if the unexpected happens.
Owning a home is one of life’s biggest milestones—but it also comes with ongoing financial responsibilities. At Your Future Set, we know that your home loan is just one part of your financial picture, so here are some practical budgeting considerations to keep in mind.
For those still working towards homeownership or planning for an investment property, building a deposit is often the first hurdle. A larger deposit can reduce the size of your loan, lower your repayments, and even help you avoid Lenders Mortgage Insurance (LMI). Some ways clients build deposits include:
Automating savings into a separate account each pay cycle.
Cutting back discretionary spending and funnelling the difference into savings.
Exploring first-home buyer incentives.
Even small, consistent contributions can make a significant difference over time.
Sometimes the easiest way to improve your financial position isn’t through your loan, but through day-to-day budgeting. Households can reduce pressure by.
Reviewing utility bills, phone plans, and subscriptions to ensure you’re getting the best deal.
Shopping smarter—whether that’s buying in bulk, meal planning, or comparing grocery prices.
Cutting back on non-essential spending and directing that money into savings or repayments.
On the other hand, some clients focus on the income side of the equation. This could mean exploring side hustles, taking on extra work, or renting out a spare room.
Even modest increases in income can make a noticeable difference when paired with smart money management.
Once you’ve secured a loan, managing repayments effectively is key to staying on top of your finances. Some practical tips include:
Aligning repayments with your pay cycle (weekly or fortnightly) to make budgeting easier.
Considering extra repayments when possible, which can shave years off the life of your loan.
Using an offset account or redraw facility to help reduce interest while keeping funds accessible.
If repayments ever feel overwhelming, speaking to your lender or broker early can open up options to restructure or review your loan.
If you’re managing several debts—like personal loans, car finance, or credit cards—combining them into your home loan through refinancing can simplify your finances. With one repayment instead of many, it’s easier to track progress increase cash flow and manage your monthly budget.
Debt consolidation can also help reduce interest costs, as home loan rates are generally lower than those on unsecured debts. However, it’s important to remember that extending short-term debts over a longer home loan term can increase the total interest paid over time.
Speaking with a mortgage broker can help you understand whether consolidation makes sense for your situation. At Your Future Set, we work with you to review your debts, calculate the potential savings, and structure your loan in a way that supports your financial goals without adding unnecessary risk.
A budget planner calculator is an online tool that helps you organize and manage your finances by inputting your income and expenditures.
A budget planner calculator is an online tool that helps you organize and manage your finances by inputting your income and expenditures.
Choosing the right home loan might look easy on the surface. However, it requires understanding loan types, interest rates, government incentives, and budgeting.
When seeking out a home loan, don’t do it alone. Use the services of a top broker. That way, you can get a loan that suits your financial goals, cash flow, and property strategy in the long run.
