How Australian home loans work
Most Australian home loans run for 25–30 years, with 30 the most common. Rates come as variable, fixed (1–5 years), or split. The RBA cash rate — currently 4.10% (April 2026) — is the main driver of variable home loan rates. Offset accounts and redraw facilities let you reduce interest while keeping access to savings.
Typical Australian home loan rates (May 2026)
| Product | Typical rate |
|---|---|
| Variable (owner-occupier, <60% LVR) | ~5.1–5.5% |
| Variable (owner-occupier, 80% LVR) | ~5.8–6.3% |
| 3-year fixed | ~5.5–6.0% |
| Average new mortgage | ~5.50% |
LVR, LMI and the 20% deposit
Loan-to-Value Ratio (LVR) is the loan as a share of the property value. Below 20% deposit (LVR above 80%), you typically pay Lenders Mortgage Insurance (LMI) — a one-off premium insuring the bank against your default. It can run into tens of thousands. The lowest rates are reserved for LVR of 60% or less.
Other costs to budget for
On top of your deposit and monthly repayment: stamp duty (state-based, often 4–5% of the property price, though first-home-buyer concessions apply), conveyancing, building and pest inspections, strata or body corporate fees for apartments, and council rates.
Worked example
Borrowing A$700,000 at 5.85% over 30 years gives a monthly repayment of about A$4,125. Total interest across the term is roughly A$785,000 — more than the loan itself. Adding A$200/month in extra repayments shortens the loan by about 4 years and saves ~A$140,000 in interest.
Frequently asked questions
How much can I borrow in Australia?
Should I fix or go variable?
What is an offset account?
How does LMI work?
Estimates only, not financial advice. Confirm with your lender or a broker.