An online business passes on the cost savings to its customers through exceptionally low interest rates
Melbourne-based Freedom Lend is a 100% online lender, which means it doesn’t have the overheads of a bricks and mortar bank and so can pass the savings, through lower interest rates, onto its customers. “Freedom Lend gained top spot as the non-bank home loan lender of the year thanks to their exceptionally priced variable home loan,” says Canstar analyst Jack Smart. “The rate for residential variable loans comes in well below the market average by 0.96%.” This category focuses on owner-occupied loans.
“While Freedom Lend has one of the cheapest rates in the market, their variable home loan offers a wealth of functionality and flexibility – from redraw and top-up facilities to a 100% offset account. Additional repayments are permitted and the loan is available to use for construction purposes.”
Freedom Lend rewards borrowers who have a bigger deposit with tiered rates on its variable owner-occupied loan. The rate starts at 3.52% for owner-occupiers with a 20%-plus deposit, rising to 3.92% for home buyers with a deposit of just 5%.
Only two fixed-rate terms – three and five years – are available through Freedom Lend. The three-year owner-occupier rate is 3.93% for borrowers with a deposit of 20% or more, rising to 4.33% on a deposit of less than 20%. The five-year fixed rate starts at 4.13%. Unlike many other lenders, Freedom Lend allows extra repayments on its fixed-rate loans, up to $20,000 annually, and a 90-day rate-lock guarantee is available.
Both fixed and variable Freedom Lend products give borrowers the option to make principal and interest or interest-only payments, though a higher rate applies to interest-only loans. Repayments can be made weekly, fortnightly or monthly.
If you’re planning to build a new home, Freedom Lend offers a construction loan with rates starting at 3.89% for owner-occupiers.
Last year’s winner, Pacific Mortgage Group, has slipped to second place but continues to offer exceptional value. Pacific Mortgage’s standard variable home loan comes with a rate of 3.60% for owner-occupiers and includes unlimited redraw, unlimited extra repayments and loan terms between five and 30 years. The maximum borrowing is 90% of a property’s value. Fixed rates are available for two-, three- and four-year terms, starting at 3.78% for a two-year fixed loan. Although AMO Group has dropped a notch to third place, down from second in 2016, it does offer a home loan that may be of interest to buyers concerned about the prospect of rising rates. The Future Proof Home Loan allows borrowers to switch between a fixed and variable interest rate to always pay the lower of the two rates. If the variable rate rises above AMO’s standard fixed-rate loan, the borrower can opt to switch to a fixed-rate loan, then revert back to a variable loan if that rate drops. The variable rate on this loan is 3.99% and the three-year fixed rate is 3.92%.