An on­line busi­ness passes on the cost sav­ings to its cus­tomers through ex­cep­tion­ally low in­ter­est rates

Money Magazine Australia - - CON­SUMER FI­NANCE AWARDS 2017 -

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%.

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