While it may be more convenient to take out a mortgage with the big four banks, you could pay much more in the long run.

We’ve compared small lenders to some of the big four in Australia to see just how much you can save by shopping around for your mortgage.

First, let’s look at some of the big four

Commonwealth Bank

A Standard Variable Rate home loan with Commonwealth Bank has an interest rate of 6.30 per cent per annum. If you took out a $400,000 home loan to be repaid over 30 years that will cost you $2,476 per month.

You’d pay $2,269 per month on a Fixed Options Home Loan – package with an interest rate of 5.49 per cent per annum.


ANZ’s Standard Variable home loan has a rate of 4.75 per cent if you’re paying both principal and interest. This would make your monthly repayments would be $2,087.


Meanwhile, NAB’s Variable Rate with Offset home loan attracts interest of 5.42 per cent. At this rate, your monthly repayments would be $2,252.

Now, let’s compare it to some small lenders home loans


Smaller lenders such as Athena offer an Owner Occupier Accelerates – Celebrate (Principal and Interest). Its rate is just 3.79 per cent so your monthly repayments would drop to $1,862.

Home Star

They’d drop even further if you chose a mortgage from Home Star. Their Star Gold Home Loan has an interest rate of 3.67 per cent and monthly repayments of only $1,814.

So, how much can you save with a small lender mortgage?

The difference between Commonwealth Bank’s 6.30 per cent and Home Star’s 3.67 per cent home loan is $662 per month.

That is $7,944 per year, or $238,320 over the lifetime of your mortgage. Those funds could either be used to pay off your mortgage faster, for your superannuation or for an investment property.

Some people stick with the big four banks because they trust them more. But this isn’t necessarily going to be the best for you. Finder money expert, Richard Whitten says: “Many small lenders in Australia are regulated in a similar way to the big banks if they are ADIs (Authorised Deposit-Taking Institutions).”

If you’re worried about whether or not they’re an ADI then you can protect yourself. Do some research and ask if they are in fact an ADI. You can also read customer reviews.

“You can also gauge how good the lender is by how its staff treat you during an initial enquiry or application. If a lender is slow to respond and provides minimal details, keep looking. Lenders should be competing hard for your business!”

Some small lenders are owned by the big banks

“When it comes to trust, at the end of the day you really need your lender to provide you with the money for your loan on settlement day. Once you’ve got the keys, your lender is facing more risk if you don’t repay your loan.”

Star Gold, a small lender offers one of the lowest variable owner-occupier home loan interest rates on the market. It comes with zero fees (excluding disbursement and government charges which still apply.

A Star Gold representative, Tanya Manyan says: “You get access to all the traditional benefits of the big banks e.g. online access, an offset account, Visa Debit card, BPay, Pay anyone and digital wallet access plus all the home loan flexibility around unrestricted extra repayments, free online redraws and multiple loan splits.

“Our loan specialists are local Aussies, based in Sydney. We are financially strong and a credible provider. Homestar Finance is backed by Colcap, which was established in 2006 and is a leading and privately owned non-bank lender in Australia.”

In addition to their main products, they also offer easy refinance, construction loans and SMSF loans.

Mr Whitten says if you’re in doubt: “Above all, protect yourself from overpaying on your mortgage by comparing widely. Look at suitable home loans from big banks, small banks, credit unions and online lenders to make sure you find a loan with a lower rate and minimal fees.”

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