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Home Loan Interest Rates

When you start hunting for your new home, you may find that the market is littered with interest-related terms that can be difficult to wrap your head around at first.

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    Buying a property is a huge decision for many Aussies. Choosing the right home loan for you means that you can continue to enjoy your lifestyle while paying off your home loan for years to come.

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    Your home loan options

    Homestar Finance offers a market-leading range of mortgage options, rates, and features for both

    Star Gold

    Variable principal & interest

    5.98%

    Interest rate p.a.1a

    5.98%

    Comparison rate p.a.1a,2


    • Zero fees*
    • Up to 70% LVR
    • Offset account
    • Weekly, fortnightly or monthly repayments
    • Visa Debit card provided with ATM access
    • Unrestricted extra repayments
    • Free online redraws
    • Multiple loan splits possible
    • Pay anyone, BPAY® and digital wallet payments
    • Schedule recurring payments or transfers
    Find out more

    Star Choice

    Variable principal & interest

    6.75%

    Interest rate p.a.1a

    6.42%

    Comparison rate p.a.1a,2


    • Revert rate features
    • Up to 90% LVR
    • Offset account
    • Weekly, fortnightly or monthly repayments
    • Visa Debit card with ATM access
    • Unrestricted extra repayments
    • Free online redraws
    • Multiple loan splits
    • Pay Anyone, BPAY® and digital wallet payments
    • Schedule recurring payments or transfers
    • Lender Paid LMI
    Find out more

    Star Classic

    Variable principal & interest

    6.35%

    Interest rate p.a.1a

    6.38%

    Comparison rate p.a.1a,2


    • Up to 80% LVR
    • Offset account
    • Weekly, fortnightly or monthly repayments
    • Visa Debit card with ATM access
    • Unrestricted extra repayments
    • Free online redraws
    • Multiple loan splits
    • Pay anyone, BPAY® and digital wallet payments
    • Schedule recurring payments or transfers
    Find out more

    Star Classic Fixed

    Fixed principal & interest

    6.95%

    Interest rate p.a.1a

    6.79%

    Comparison rate p.a.1a,2


    • Up to 80% LVR
    • Weekly, fortnightly or monthly repayments
    • Extra repayments up to 20k p.a.
    • Free online redraws
    • Multiple loan splits
    • Pay anyone, BPAY® and digital wallet payments
    • Schedule recurring payments or transfers
    Find out more

    Star Essentials

    Variable principal & interest

    6.25%

    Interest rate p.a.1a

    6.28%

    Comparison rate p.a.1a,2


    • Up to 80% LVR
    • Weekly, fortnightly or monthly repayments
    • Unrestricted extra repayments
    • Free online redraws
    • Multiple loan splits
    • Pay anyone, BPAY®  and digital wallet access
    • Schedule recurring payments or transfers
    Find out more

    Star Classic

    Variable principle and interest

    6.55%

    Interest rate p.a.1b

    6.58%

    Comparison rate p.a.1b,2


    • Up to 80% LVR
    • Offset Account
    • Visa Debit Card Provided with ATM Access
    • Unrestricted Extra Repayments
    • Free Online Redraws
    • Pay Anyone & BPAY® Available
    • Multiple Loan Splits Possible
    • Weekly, Fortnightly or Monthly Repayments
    • Schedule Recurring Payments or Transfers
    Find out more

    Star Classic

    Variable interest only

    6.95%

    Interest rate p.a.1b

    7.03%

    Comparison rate p.a.1b,2


    • Up to 80% LVR
    • Offset Account
    • Visa Debit Card Provided with ATM Access
    • Unrestricted Extra Repayments
    • Free Online Redraws
    • Pay Anyone & BPAY® Available
    • Multiple Loan Splits Possible
    • Monthly Repayments Only
    • Schedule Recurring Payments or Transfers
    Find out more

    Star Classic Fixed

    Fixed principal & interest from

    7.35%

    Interest rate p.a.1b

    7.01%

    Comparison rate p.a.1b,2


    • Up to 80% LVR
    • Extra Repayments up to 20k p.a.
    • Free Online Redraws
    • Pay Anyone & BPAY® Available
    • Multiple Loan Splits Possible
    • Weekly, Fortnightly or Monthly Repayments
    • Schedule Recurring Payments or Transfers
    Find out more

    It’s important to familiarise yourself with all the different home loan interest rates and loan structure jargon to make sure that you’re getting the best mortgage for your financial situation. Luckily, they’re a lot simpler to understand than you may think and that’s why we’ve come up with this straightforward guide on home loan interest rates to get you comfortable and confident with your home buying journey.

    At Homestar Finance, we have a range of home loans to suit your needs and lifestyle. Whether you’re looking for investment home loans or owner-occupier home loans, we’ve got you covered with some of the most competitive rates on the market.

    The first major decision you’ll have to make regarding your home loan is whether you’ll want to opt for an owner-occupied loan or an investment loan.

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    As the name suggests an owner-occupier loan is intended for someone who is looking to purchase a residential property for themselves and an investment loan is for property investors looking to purchase a property with the intention of making rental income from it.

    The main difference is that investment loans generally tend to have higher interest rates and stricter lending criteria since lenders consider them a higher risk. However, if you are buying property for the purposes of investment, you will not have access to an owner-occupier type loan.

    How to evaluate and choose home loan interest rates

    There are a number of considerations you should make when choosing or comparing home loan rates, as these are the most significant variables that’ll affect the money you end up paying in the long term. That’s why we’ve broken down the fundamentals below to make the process a little less daunting.

    What is interest?

    Your mortgage repayments will be made up of two major parts: principal repayments and interest repayments. Of these, the principal repayments refer to repayments made on the overall loan balance, i.e. the amount of money that was borrowed.

    Interest repayments are not as rigid, and are made up of calculations based on the size of your loan and the interest rate attached to it. In layman’s terms, interest is the monetary fee charged by the lender for borrowing money and is usually denoted as an annual percentage rate (APR). Your lending institution will take your loan balance and multiply it by your interest rate. They will then divide that amount by 12, 16 or 52 depending on the frequency of your repayments.

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    How is it calculated?

    Interest rates will have the greatest impact on your monthly repayments and that’s why it’s vital to get a solid idea of how much you’ll end up paying down the line. Calculations can get a bit complicated when it comes to taking into compounding interest, etc. You can head over to our home loan calculator for an easily digestible breakdown of your repayments!

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    Great rates. Great service. Where customers feel at home.

    What is a comparison rate?

    The purpose of a comparison rate is to help you understand the true cost and value of a home loan. The comparison rate is an accumulation of the interest rate, as well as other fees and charges relevant to a certain loan. 

    Comparison rates basically serve as a standardised measure that can help you to compare different loan products offered by different lending institutions without having to crunch the numbers. The formula for calculating comparison rates is regulated and provided by the Consumer Credit Code and all Australian financial institutions and mortgage providers are required by law to use this same formula.

    Do keep in mind, however, that comparison rates do not always provide the full picture. Government charges such as stamp duty or title registration fees, as well as fees and waivers associated with loan options.

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    That’s why it’s best to not take comparison rates at face value. Though it can help you to filter through your options, always be sure to do some research into the terms and conditions before signing up. If you want peace of mind while sifting through different loan products, be sure to make use of our free comparison rate calculator to help you get started.

    Variable vs fixed rate: what is the difference?

    It’s vital that you understand the differences between variable interest rates and fixed interest rates to ensure you’re getting the most suitable loan for your personal financial circumstances.

    Whether you’re applying for a new mortgage or refinancing your current home loan, the type of interest you opt for can have heavy implications on the amount you pay, as well as your payment structure.

    Variable rate home loan

    Refers to a mortgage where the interest you are charged on the overall balance fluctuates based on market values. These market values are generally determined by the Reserve Bank of Australia, albeit there are other underlying variables that may influence the going rate.

    Fixed-rate home loan

    Refers to a mortgage where the interest rate remains stable and consistent, either for the entire duration of the loan or more likely, a fixed rate period that is specified when signing the contract.

    Generally speaking, fixed rate home loans allow for a more rigid payment structure, meaning you can easily budget for repayments since you’ll know exactly how much you’ll have to pay. They’re also favourable when interest rates are uncharacteristically low since you’ll be able to lock it in for the foreseeable future.

    On the other hand, variable rate home loans often provide better flexibility and accessibility to key features such as additional repayments and an offset account. They also tend to have lower interest rates compared to fixed interest rates that are available at the same time and will decrease alongside declining interest rates. However, as you can imagine, the major downside is that an increase in interest rates across the board will result in an increase in your interest repayments and you will not be able to budget effectively as a result.

    What is Loan to value ratio (LVR)?

    Loan to value ratio (LVR) is a metric used by lending institutions to measure the amount you need to borrow to buy a specific property. It is calculated as the overall home loan amount expressed as a percentage of the overall property value and it is an early indicator of your borrowing power.

    calc-8

    How is LVR calculated?

    For example, let’s say you have a $150,000 deposit for a house worth $600,000.
    Then you would have to borrow $450,000 through a home loan.

    This means that your LVR = $450,000/$600,000 = 75%

    That’s why typically, a low LVR is desired since lenders will determine you to be less risky. In terms of a residential mortgage, a higher deposit and subsequently, a low LVR would make you a lot more attractive to lenders and help qualify you for better rates and larger loan amounts.

    With that being said, as most property investors choose to take on as much debt as possible, lowering your LVR as much as possible may not always be in your best interests.

    Do note, however, that an LVR of more than 80% will usually incur hefty lenders mortgage insurance (LMI) premiums.

    LMI is in place to protect and insure the lender in the case that you default on your home loan. The higher your LVR, the more costly your LMI premiums will work out to be and this scenario is generally ill-advised, as LMI can add up to tens of thousands to your home loan.

    The difference between investment and owner-occupier home loans

    Again, an owner-occupied home loan is reserved for individuals who want to purchase a place of residence. If this sounds like you, you can choose from a wide range of fixed and variable rate owner-occupied home loans provided by most lenders. 

    If you’re happy with your current home, whether you rent or own, but are still in the market for a property to enhance your passive income, you’ll be looking for an investment property and will need to look for an investment loan.

    Investor loans are specifically designed for property investors. They include loan features and benefits that’ll help you maximise the returns on your investment. However, the interest rates on investor loans generally tend to be higher than on owner-occupied loans since most lenders characterise investors as high-risk borrowers. 

    A lot of home loan features are available for both owner-occupier and investor loans. These can include fixed or variable interest rates, offset accounts, redraw ability, as well as the ability to make additional repayments. One particular loan feature that you may only find on an investment loan is the option to make interest-only repayments for a set amount of time, as interest on investment loans are generally tax deductible.

    Home loan tools and calculators

    Homestar Finance has a range of home loan tools and calculators that can help you get a better idea of principal and interest repayments, as well as any potential features you could be making use of such as additional repayments or an offset account.

    Moreover, we offer similarly extensive guides for first home buyers and refinancers alike, to help you make the most of your next loan.

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    Homestar Finance has been providing Australians with competitive and customer-focused home loan solutions since 2004.

    Our dedicated team of loan specialists are there to support you through your home loan journey, and take the time to get to know you so we can offer our customers a personalised service – making it easy to find a home loan solution that suits you.

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    Investment Variable Home Lender

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    1 Rates shown apply to new eligible Owner Occupieda or Investment home loansb only, loan limits may apply depending on your product (refer to the product page) and at least one applicant is on PAYG employment. For fixed rate loans, after the fixed rate term, a variable rate will apply. Rates are subject to change without notice. Existing borrowers may have different interest rates which are dependent on the rate offered to the borrower at the date when a home loan settled and any reductions or increases the lender decided to make on the existing loan over time. Accordingly, there is not one standard variable rate that applies to all Homestar home loans and existing customers can confirm their current rate(s) by logging in to internet banking or by contacting customer service. Terms, conditions, and eligibility criteria apply.

    2 Comparison rates are based on a basic Homestar loan, on a $150,000 loan amount over 25 years. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

    3 Third party cost(s) incurred by service provider(s) are payable and may vary or increase depending on the service provider, nature of the service and request. Any additional cost(s) are passed on directly to the applicants(s). If there is a variation or an increase, a separate quote will be provided..

    4 Disbursements may also be payable.

    Other fees and charges may apply.

    DISCLAIMER: Terms, conditions and eligibility criteria apply to all our loan products and features. Fees, charges and disbursements are payable. Final approval is subject to credit assessment. Information valid as at 15th November 2023 which is subject to change without notice. Please consider if the product is appropriate for your individual circumstances. If you need assistance or have any questions about a product or feature and its suitability, please contact our Loan Specialists.

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