Refinance with Ubank (30 Years, No Offset) or Loans.com.au?

ALpha on 02/06/2015 - 23:28

Hi,
I am considering re-financing my home loan as it is no longer competitive. Zoom down to Ubank or loans.com.au.

Points of consideration:

  1. Ubank is now offering 4.09% variable / comparative rate for its HomeLoan Real Rewards Offer (0.33% off its standard variable rate home loan now at 4.42%).
    Pros: No application fee, no on-going fees and unlimited re-draws; 0.1% Loyalty Discount after 3 years. Backed by NAB.
    Cons: no offset account, 30 year loan (no shorter/longer)

  2. loans.com.au is now offering 4.02% variable / 4.04% comparative rate for its Offset Dream Home Loan.
    Pros: Offset account, No application fee, no on-going fees, free $150 conveyance (but no use for re-finance?).
    Cons: Non-bank lender (but backed by firstmac?)

I spoke to a Ubank homeloan consultant over the phone.
I like having offset facility for the convenience for my "spare" cash. Ubank offers unlimited redraw but the consultant told me if I do a one-off lump sum re-payment of $100k (example), it will be ammortised into the loan and may not be the full $100k when I needed to withdraw, even if I am making regular re-payments - does not make sense to me but she is not able to explain / articulate why. this makes me wary on additional re-payments.

I also used Ubank calculator and found that the total interest payable over Ubank 30 years loan @ 4.09% is higher than my current homeloan of 25 years @ 4.50%.

Am I missing something? But Ubank additional 0.1% Loyalty Discount appears very enticing.
Please share your thoughts!

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Comments

  • tomleonhart on 03/06/2015 - 08:29
    +2

    Broker here.

    "I also used Ubank calculator and found that the total interest payable over Ubank 30 years loan @ 4.09% is higher than my current homeloan of 25 years @ 4.50%." It's higher because you were supposed to calculate Ubank @ 4.09% for 25 years not 30 years. That's 5 years of extra interest in your initial calculation.

    If you're looking to rent out your property in the future, offset account is the way to go. If not, save money and go with Ubank.

    • spackbace on 03/06/2015 - 10:44

      Broker needs to learn to read ;)

      Cons: no offset account, 30 year loan (no shorter/longer)

      • tomleonhart on 03/06/2015 - 11:38
        +1

        Hehe. You only think one step ahead.

        Nothing stops OP from taking his loan amount, interest rate from Ubank and input into a calculator for 25 years to compare 25 years loan with a 25 years loan.

        Or take his current loan amount and his current interest rate and put in into the calculator for a 30 years loan.

        You can't compare a 25 years loan to a 30 years loan is my point.

        • jaybmate on 03/06/2015 - 13:18

          30 year loan (no shorter/longer)

          If the person pays it off faster with extra lump repayments, can you pay it off faster? if not, what happens?

          Looking at figures, paying a house off in 25 years instead of 30 years, you end up saving $50k+. Its a bloody lot.

        • tomleonhart on 03/06/2015 - 13:20

          @jaybmate:With a variable loan, there is nothing stopping you from paying a 30 years loan in 25 years. On the other hand you can't pay a 25 years loan in 30 years.

          Either way once your loan is pay off you will still have to pay a discharge fee.

        • ALpha on 03/06/2015 - 20:01

          Yes, it is obvious to change to 25 years but Ubank calculator does not let you change the number of years. Again it is obvious that i can use another bank homeloan calculator to do it.

          What I am wary is that Ubank calculating on 30 years loan would incur higher interest upfront regardless of additional repayments. Does anyone know?

  • YTW on 03/06/2015 - 09:48
    +1

    You don't mention what the fee is for early repayment. Or the ability to fix part of the loan if you want to. And is the 0.33% off the standard rate forever?

    • ALpha on 03/06/2015 - 20:05

      For variable rate, there is no penalty for early repayment… afaik.
      Possible to split the loan with fixed portion but that is not my intention, so i did not look into that.

      the 0.33% discount from standard rate appears to be for the life of the loan. Read in another post that previously it was 0.25% discount and the existing customer is not entitled to the 0.33%. Need to check with Ubank but calling 13xxxx to the customer service is a hassle and the online chat pops up when it wants to. and the skype does not work.

  • leiiv on 03/06/2015 - 17:37

    The 0.1% loyalty discount only kicks in after 3 years. Nobody will know if their standard rate or offer will stay competitive in the future.

    • ALpha on 03/06/2015 - 20:08

      Agree but so far, Ubank variable rate is the next lowest to loans.com.au, apart from some other non-bank lenders that are not so well advertised or occupation/industry specific.

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