I believe it's only NEW applications!
I believe the best deal going!
UBank Home Loan 4.46% $650k +
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Thought the Heritage deal is still one of the best - 4.44% comparison
Heritage was offering free application up until Christmas. Reducing the comparison rate to 4.40%.
Does Heritage offer offset account? Never heard of them
Great rate.
I called them but not available for my needs. :(
Broker here. Heritage bank is actually doing 4.39 variable minimum 150k.
there's no Heritage branch in SA? can you suggest another one?
Can you still get a loan with them without a branch?
what's the cons if I get a loan without a branch?
there aren't any. I've never used a branch for a home loan.
Sounds interesting. Does the Heritage product have an offset account, and any ongoing maintenance fees? Is there a specific link for this loan offer?
Hi Shake, please pm me if you have more question.
Why can't you answer this publicly?
@Rookie117: Because then I'll take over this comment section with just my comments and that's an insult to OP I'd like to think.
But here is the direct link to the product if you'd wish.
http://www.heritage.com.au/Home-Loans/Discount-Variable/Rate…
These have no offset account available if thats important to you
what's an offset account?
"An offset account is a transaction account that can be linked to your home or investment loan. The credit balance of your transaction account is offset daily against your outstanding loan balance, reducing the interest payable on that loan."
Not to mention if the loan is for your investment property, offset account offers tax benefit as well.
Exactly. Meaning your wages and any other savings you have in there are taken into account when calculating interest. Example if your loan amount is $650k but you have $50k in your linked offset account, your interest for that period will be charged on $600k only instead of $650k
Not to mention if the loan is for your investment property, offset account offers tax benefit as well.
I know offset is very good for a principal home loan, since ur saving money by paying less interest. But I dont understand how an offset account gives tax benefits?
@mmd: Agreed, if you have an investment loan, and a PPOR loan, then you are better having the offset with the PPOR loan, and not the investment loan.
Why? Because the interest generated by the investment loan can be written off to tax, whilst the interest generated by the PPOR loan… you can't do anything with it.@schwinn: I agree with schwinn; if you have a PPOR loan then you will be better off using the spare cash to offset the PPOR rather than the IP.
However if you don't have a PPOR loan, then an offset account against the IP would be very useful for tax purposes (as previously stated by @tomleonhart).
Thanks for explaining what it means, i now understand :)
You stick all your cash in an offset/savings account and that's deducted from the mortgage before the bank calculates interest.
If the amount of savings equals your mortgage - e.g. $650k in offset/savings, $650k in mortgage - you pay $0 interest.
So why do this instead of paying off the mortgage? Several reasons. If you've paid off your mortgage then all your equity is tied up in your house, which could take several months to sell. So if need $650k in a hurry - e.g. you're buying an investment, or bidding on an auction - you don't have to first sell your existing house, or use drawback, or take out a second mortgage. You've got instant access to the $650k cash in your offset account.
Or you might want to move house. You can just buy the second house before selling the old house. Then you pay full interest for a few months until you sell the old house. Then use the cash from the sale of the old house to close the old mortgage. You didn't have to sell the old house first before moving. Much cheaper than bridging finance.
Or you might want to buy a new car. A home loan is the lowest interest loan you're likely to get. Half the interest of a car loan. You're much better off using money from the offset account rather than taking out a car loan, and just buying your car with cash.
Smart money uses offset accounts
that's very good explanation and example
I knew what an offset account before but this really cements it with pros for it! Thanks!
Smart money uses offset accounts, but not for investment loans. See above.
Lowest interest loans are credit card deals which can get. Often 0% over 6m or 12 months.
There's a reason why credit card and car companies are willing to give you 0% for X months while you'll never see the same in a mortgage.
Car finance: 0% interest, but the interest charges are already calculated into the price of the new car you're buying. The customer still pays the interest but they just can't see it as easily as before.
Credit card: 0% interest, but if you make even one new purchase on the card during that time then you lose your interest free period for that and all subsequent purchases. That's because you'll be carrying a balance month to month. The other factor is the bank really really hopes you'll have trouble paying off the 0% balance transfer by the end, at which time they'll slap you with interest.
Not quite right in regards to the credit card though it used to be the case.
The law was changed a few years ago so repayments will always repay the balances with the highest interest rate first. So you can repay just the purchases to keep your 0% balance transfer.
http://www.creditcards.com/credit-card-news/help/what-the-ne…
That is true in terms of repayments, but it's not the point I addressed. All new purchases on the card will not have the benefit of an interest free period while the 0% balance transfer is there. Yes, repayments made to the card will go towards the new purchases first, but it's a trap I've seen people fall into. They think they can get a 0% balance transfer and have 55 days interest free.
Just 1 problem… First, you need $650,000 cash.
<should have read whole thread first. I have nothing to add. :)>
ubank lets you do daily redraws at no cost, so you can keep all your money on the loan anyway. No major drawback not having an offset account.
Yes it is if the loan is an investment loan.
so there is no such option for an owner occupied properties?
Offset and redrawn options are available for both investment and owner occupied. However tax implication differences only applies to investment loan. PM me if you have any more question.
For the investment property, especially an investment one transferred from self resident property , offset is totally different from redraw in term of tax.
Can you please clarify this?
For owner occupied housing there are a few but limited advantages to an offset account. For investors there are a lot, as mentioned earlier on this page.
http://www.abs.gov.au/ausstats/[email protected]/mf/5609.0
About 50% of home loans go to investors so it's a big market.
Let's say you have 500k homeloan for your investment property.
Scenario 1. REDRAW facility
1.1 Repay 100k
Loan balance is 400k.
Maximum deductible interests is on the 400k.
Pay interests on 400k.1.2 Redraw 100k for "private" use, say travel around the world.
Loan balance is 500k.
Maximum deductible interests is on the 400k.
Pay interests on 500k.1.3 Put back 100k later into the loan.
Loan balance is 400k.
Maximum deductible interests is on the 400k.
Pay interests on 400k.Redraw facility saves you interests and has potential to reduce maximum deductible interests.
Scenario 2. OFFSET facility
2.1 Put 100k into offset
Loan balance is 500k.
Maximum deductible interests is on the 500k.
Pay interests on 400k.2.2 Withdraw 100k from offset for "private" use, say travel around the world.
Loan balance is 500k.
Maximum deductible interests is on the 500k.
Pay interests on 500k.2.3 Put back 100k later into the offset
Loan balance is 500k.
Maximum deductible interests is on the 500k.
Pay interests on 400k.Offset saves you interests and keeps maximum deductible interests.
Thanks tg. It was really easy to understand.
Does "Maximum deductible interests" mean anything to self resident property?No. Deductible interest only applies to investment property.
Yes, you are saving "maximum deductible interests" for the future.
No one can predict the future.
Your principle place of residence might become investment property in the future.
Normally a home loan with offset attracts $200~$400 per year compared to a home loan without.
You should treat this as an opportunity cost to save "maximum deductible interests".@tg: Thanks tg and tomleonhart!
I'm currently on UBank and considering to switch to loans.com.au mainly for the offset feature. Your comments are really helpful.
can refinance qualify for UBank or Heritage?
@tomleonhart and nhand42: Thank you for your explanation! I dont think that even a banker or a teller can give a better explanation and easy to understand like you guys just did. In fact, i have asked CBA's tellers serveral times about this offset account, they can hardly explain the difference between an offset account and MISA account. So i asked them: which one is newer and better=> and they replied get the offset account@.@!!
I understand why they would answer that way. Without taking into account your personal needs, it's hard to give advice on which option is better. Any more question, just ask :)
I think in Commbank they called it MISA account? I use MISA to offset my loan in CBA mortgage.
so whats the difference between offset account and MISA account? Is MISA like redraw?
MISA is not a transaction account. There's a minimum withdrawal ($500).
The everyday offset account on the other hand is a transaction account.
I believe you are referring to the "MISA" account and the "Everyday Offset" account.
They are technically both offset accounts (in terms of offsetting your balance for interest calculation).
MISA is a traditional offset product. It's cheaper (or free) for most home loans but with more restrictions e.g. $500 minimum transaction amount, unable to withdraw money directly from ATM, etc.
Everyday Offset is a new product released about 12 months ago. It's basically a full transaction account (i.e. CBA Complete Access account) + offset account. You can withdraw money from it directly using an ATM. You can setup direct debit on the account. There is no minimum transaction amount. There is a fee to activate it and also a monthly fee associated. (I heard they are now included free in some home loan packages but not 100% sure. Check with your banker.)
Disclaimer: associated with CBA but not in retail. Commenting as a CBA customer only.
I just called ING but they wont match Heritage Bank's offer.
They only offered 4.88%
Any terms and conditions in this offer of 4.88%? What is the type of loan?
I am with ING and planning to call them.
ask to speak to their retentions team.
It is said U bank can only borrow Max LVR 80%. When LVR is calculated, is it by purchase price or by current market value? I think it wouldn't be the same especially when a property was purchased 2-3 years ago.
The LVR is calculated bases on current valuation. If it says 'no application fees' then Ubank will do this for free.
I have heard that Heritage charge $20 for a redraw. I am with Ubank and it is free with them. Also have a look at the usaver and Usaver ultra accounts with Ubank.Thanks Kirath.
Bank normally send out a valuer to value your property before approving your loan. You need to find out if Ubank is going to cover the cost for a valuer. Many banks cover this cost to bring in business.
Thanks Tomleonhart.
Ubank didn't charge me for the valuation. A guy turned up a few days after I put in my refinance application. He took about 10 minutes to walk around the house, asked a couple of questions, and that was it. Really quick. I didn't get the number but it satisfied UBank.
Bargain debt, but you have to pay bubble prices buying a property to take advantage. Hmmm tough choice on whether this deal is worth it, but thanks for sharing :)
I agree, but you never know if you're in a bubble unless/until it pops…
it will burst if govt wants to stop access for foreigners to 'invest' in local properties.
bring back the bargains to the property market
whoever neg me knows that am telling the truth;)
The thing to remember is that any rate is negotiable, irrespective of the lender.
To a certain degree. Most banks won't negotiate below their current lowest rates.
Two months ago I went to the CBA to renegotiate my mortgage as I was thinking of refinancing. Nope, the CBA wouldn't budge 0.01%. They just showed me their standard interest rates and told me to try UBank if I'm thinking of getting a better deal. So I did. Currently paying 4.54% with no fees.
Unless you have a Sydney sized mortgage banks are unwilling to negotiate.
CBA matched another bank for me this year and I only owed 55k at the time. I do however, owe 380k on another mortgage with them.
I have a mortgage under 200k with the NAB and they have dropped it twice this year. I did try to get them to move it to the Suncorp deal a while back, but they said I'd already had it adjusted twice. The local manager "says" that I'm getting better then staff rates at the moment. That sounds nice, but still not as good as the Suncorp deal at the time.
To answer your question; they will move, you just need to have a person who cares about you enough to do something about it.
P.S. Got my annual fee waived as well!
Can anyone explain why heritage is 4.39% but 4.44% comparison.
I can't find any yearly or monthly fees so why isn't it flat 4.39%?
Exit fees? Mort discharge?
Application fee of $600
application fee of 600 on a 25 years loan. 600 / 25 = $24 year.
100.000 x 0.0439 = 4390 + 24 = 4414.
That's your 4.4% comparison rate.
Jesus 24 a year really adds up lol.
Thanks for that!
No gift card :( https://www.ozbargain.com.au/node/142561. I got this, they covered all the fees and the loan was fee free too.
Application process was a bit painful, lots of paperwork to upload and took them ages to confirm the loan, even though the initial 'qualification' was immediate.
They used to come with a $2,014 gift card! :)
Still pretty good — they do have some postcode and building type restrictions… But you won't know that until you lodge all your paperwork! And relodge when another staff member looks at it, and then lodge some more by the original staff member…
Maybe they'll have $2,015 gift card promotion in a few days time :P
No offset account on a loan with min $650k is a BIG deal breakrr for me. Still believe 4.48% I got with loans.com.au together with 100% offset account is the best deal goibg around :)
Yep no offset is a deal breaker for me too. My offset is knocking 10 years off my home loan. My rate not as good as yours but I'm with Suncorp @ 4.64%
Is it your only loan? If you are a non investor you would be knocking off even more years by going to the cheaper rate and putting your money into the redraw facility.
Redraw facility doesn't work for me because I gain a tax benefit for offsetting the interest on my investment property to the interest on my personal home loan.
Currently it's my only loan however I am looking at adding an investment loan into the mix. I'll have to check out loans.com.au
If there is a free redraw facility and no cap on the amount of extra repayments, an offset account is the same as just putting extra money on top of your loan. The major difference is that in a financial crisis - the bank can choose to pay down your loan with the extra funds you have on top of it, whereas usually with an offset account they can't.
I prefer the offset account too, but the reality is that there isn't much difference if you aren't an investor.
Next question is then, does this deal have a free redraw facility? ;)
Don't forget the tax implication. A redraw facility is completely different from an offset account in that regard.
Hi TtiGeR, can you address more info. about this - how are they different? if transfer home to investment property, which way should use? thank you
The tax benefit comes if you have an investment property. Not if you just buy a house and have a redraw facility. You are NOT taxed on the interest saved from your redraw facility. I would like to know what the actual tax "implication" is from having a redraw facility over an offset account for a non investor.
My house still have 65K owing to it. UBank has a lower interest rates. Question: Would it be better, in my case, to borrow…say 100K - pay the remaining 65K of the house and the rest either buy a car or reno.
Thanks.The real question is:
Do you want to borrow 100k to buy a car or renovate? You can.
Thinking about it, I dont really need a new car as I already have new Mazda SUV - more so for the partner. But reno seemed to be a better option :)
Was wondering at what should I tell the bank? Should I just say, "I want 100K to pay my remaining mortgage and for reno?"
I wonder what criteria I need to fulfill before they can grant it.
"I wonder what criteria I need to fulfill before they can grant it." - That you have the ability to pay it off.
or the equity to pay the bank back.
I have fixed and variable loans. Fixed loan is one more year to go. I was wondering if it is possible to refinance my variable loan with Ubank while the fixed loan is left with current bank. Cheers
Time to put the squeeze on my bank again
Homeside refuse to budge from 4.9%, so it's time to leave.
Does anyone know how long this or the heritage offer is valid for?
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This and loans.com.au are the best deals going at the moment.