As­pir­ing owner-oc­cu­piers will find that good things can come in small pack­ages

Money Magazine Australia - - CON­SUMER FI­NANCE AWARDS 2017 -

There has been a change to this cat­e­gory this year as in­vest­ment loans now have their own award so Home Lender of the Year fo­cuses solely on loans for owner-oc­cu­piers. Home buy­ers who need con­vinc­ing that great-value home loans can be found out­side the big banks need look no fur­ther. The top three in this cat­e­gory are firm ev­i­dence that smaller lenders can de­liver su­per­sized sav­ings on home loans.

At the top of our ta­ble, Bank Aus­tralia of­fers home loan rates well be­low the mar­ket av­er­age with­out scrimp­ing on fea­tures.

Fol­low­ing a name change in 2016, Bank Aus­tralia (formerly bankmecu) has rock­eted ahead with a suite of ul­tra-com­pet­i­tive home loans. The Ba­sic Home Loan is a stand­out prod­uct with an owne­roc­cu­pier vari­able rate of 3.86%, which Canstar an­a­lyst Jack Smart says is 0.57% be­low the mar­ket av­er­age. Fea­tures in­clude re­draw and the op­tion to take a break from re­pay­ments if you’re ahead.

The Ba­sic Home Loan is also avail­able as a fixed-rate op­tion. The one-year fixed rate (for owner-oc­cu­piers) is 3.89%, ris­ing to 3.99% fixed for two years and 4.14% for a three-year term. For home own­ers hop­ing to fix for longer pe­ri­ods, the five-year rate is 4.44%. Bor­row­ers have the flex­i­bil­ity to take an each­way bet, split­ting the Ba­sic Home Loan be­tween fixed and vari­able rates. The only po­ten­tial down­side is that the max­i­mum lend­ing limit is 80% of the value of the prop­erty.

Bank Aus­tralia also of­fers a Pre­mium Home Loan Pack­age with a tiered rate start­ing at 3.82% on loans of $700,000-plus for bor­row­ers with a de­posit of more than 20%, ris­ing to 4.27% on loans be­tween $100,000 and $400,000 where the de­posit is be­low 20%. The an­nual pack­age fee of $350 buys ad­di­tional perks in­clud­ing free off­set and trans­ac­tion bank­ing, zero an­nual fee on Bank Aus­tralia’s Plat­inum Re­wards Visa credit card, and 10% off the cost of gen­eral in­sur­ance prod­ucts.

“Along with sharp rates, Bank Aus­tralia of­fers ease of ap­pli­ca­tion through on­line and bricks and mor­tar chan­nels plus in­stant val­u­a­tions,” says Smart. Qu­dos Bank, formerly Qan­tas Credit Union, has climbed from third place in 2016. Qu­dos’s Low Cost Home Loan comes with a “wel­come rate” for new cus­tomers of 3.99%. The com­par­i­son rate is also 3.99%, in­di­cat­ing the loan comes with zero fees – no es­tab­lish­ment, an­nual, ac­count-keep­ing or re­draw fees.

This loan comes packed with ex­tras in­clud­ing a 10% dis­count on Al­lianz home and con­tents in­sur­ance and free 100% off­set ac­count. Owne­roc­cu­piers can bor­row up to 95% of the prop­erty value (with lenders mort­gage in­sur­ance). Qan­tas Fre­quent Flyer mem­bers may be in­ter­ested in Qu­dos’s Qan­tas Points Home Loan, which de­liv­ers 150 Qan­tas points for ev­ery $1000 of the loan bal­ance, and comes with a vari­able rate of 4.19%. New­cas­tle Per­ma­nent has slipped from sec­ond place in 2016. It of­fers a gen­er­ous se­lec­tion of home loans in­clud­ing the op­tion to fix for a whop­ping 10 years (at 6.89%). The cheap­est rate of 3.89% ap­plies to both one- and two-year fixed loans. Or pay from 3.84% for a Pre­mium Plus Pack­age Home Loan with an an­nual fee of $395.

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