Cheapest Home Loan award: Best of the Best 2018


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The Reserve Bank may have left the official cash rate at a record low of 1.5% in November but there's still a massive 2.28% difference between the cheapest and dearest variable rates on Canstar's database.

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The cheapest, courtesy of our non-bank winner Reduce Home Loans, has an advertised rate of just 3.39%. The dearest, which you won't find in these awards, is 5.7%.

Queensland-based Reduce has picked up the top award for the third year in a row.

Its Rate Buster standard variable loan allows unlimited extra payments and redraws (but repayment frequencies are only monthly or fortnightly).

Borrowers who maintain a good repayment history over five years may even be eligible for a discount.

If you need to borrow more than 80% of the purchase price, then our second placegetter (also from Reduce) may suit.

This loan allows you to go up to 90% (lenders mortgage insurance is payable) but you will have to add 0.25% to the advertised rate.

Among the banks, Bank of Sydney moved up a spot to take the No. 1 position from UBank. Its Expect More home loan offers both offset and redraw.

You'll have to open a transaction account with the lender as repayments have to be directly debited from a Bank of Sydney transaction account.

Eligibility, as with UBank, is restricted to PAYG applicants and in Bank of Sydney's case you need a minimum of one year in the same line of employment.

You'll need to move fast on this deal, which includes waiving the $395 annual package fee, as the website says applications must be submitted by December 31, 2017 and for metro postcodes only. Restrictions apply for Queensland properties.

The winners were ranked by the total cost of the loan - the interest cost plus fees - using 50% advertised rate and 50% average 6-month historical rate, for a $350,000 mortgage over 25 years, 80% LVR. Loans had to offer redraw.

Must be available for principal and interest loan payments.

See more from Best of the Best 2018 here or grab the December issue for full coverage.

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