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