This is a good news and I think this is the lowest ever.
UBank cuts variable rate by 0.25% p.a.
UBank will reduce all its variable home loan rates by 0.25% p.a.. This will, for example, bring new Owner Occupier P&I loans down to 3.74%p.a. which includes a discount of 0.43% p.a (value offer).
This rate cut means UBank is now offering its lowest ever standard variable rate. These rate changes will be effective from Monday 16 May 2016.
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With loans.com.au you can only borrow less than 500k. CMIIW
My loan with them is larger than that, sadly
I dont think that is true. I too have bigger than 500K loan with them.
T&C's change.
With a bunch of fees!
I think the uBank product ends up being cheaper still.
what fees? i'm with loans.com.au but pay no on-going fees whatsoever other than $150 loan establishment fee?
not to mention that loans.com.au provides you with 100% offset account and drawback facility… couldn't be happier with them
When you establish the loan you end up paying valuation, and other charges.almost 1000 i paid 4 years back.but the best rate with offset account.
The rate mentioned comes with an annual fee (and a bunch of establishment and discharge fees too)
https://www.loans.com.au/home-loans/Dream-Home-Loan-Move-Fas…
I have a loan with each of ubank and loans.com.au and loans absolutely pantses (word) ubank. The platform is so much better it's worth whatever difference there is in fees!
My experience suggests the same. If your life is b&w, and you want lowest cost regardless, sure, ubank.
I'm +voting based on rates/fees only.
Just clarifying - do you mean loans.com.au has a better platform than UBank? Or the other way round?
Thanks.
Loans.com.au is vastly superior. You also get a free offset and debit card.
They also have a tendency of jacking up the rate on existing clients against any moves with the cashrate.
They start out the cheapest and while still cheap after they jack up the cash rate nowhere near as cheap as when you start with them.
lol !!. Now I understand, there is always a better than best deals.
Look at the comparison rate people.
…which isn't usually representative of people's loan size. It's best to work it out yourself.
Ubank's comparison rate is usually the same as their advertised rate.
Correct because they don't have any fees.
How are their reviews?
I've been with them for ~ 5 years now.
Generally pretty happy. Online only is a great plus for me, especially when setting up. It has also been a pain once or twice.
Honestly, it is a dead simple product that is one of the best rates around.
ING had a slightly more featured/complicated product, but they screw exisiting customers over all the time, and are dropping their loan payment bonus.
loans.com.au and scmc look interesting, but not enough to take me away from uBank.
Are you getting additional discounts(loyalty) from Ubank as you crossed more than 3 years?
I jumped on to a fixed rate the week before all IP loans went up by a lot.
… But now I want to know if they will give me the discount for bringing my PPOR loan over to them.
If you are on the lowest rate, no. This rate already contains a discount that is higher than the 0.1% loyalty bonus.
I would rather ubank. Loans.com.au was the lowest for me but then they raised their rate when no cash rate was cut which went against what they said they would do. So my rate is 3.89 and they wont change me tempted to jump to ubank to be honest but my loan isnt huge so it really doesnt justify the fees to change.
Been with them 3 years or so. Started on a 0.25% discount or something and have had no issues asking for the better discount twice (standard discount has gone up twice since I've been with them).
Had no other issues, wish they had offset but apart from that they have been fine.
They have a redraw account, potato/patato.
Not the same if you want to Negative Gear some day.
Could you please explain me more why offset is important if we want to negative gear? I don't understand that. Thanks.
@divious:
When you pay money off on your loan and later redraw it, depending on what you use the money for it may not continue to be tax deductible.
Assuming your property is an investment property: If your original loan was $400K, and you've paid off $100K, you have an outstanding loan of $300K. Let's say you withdrew $40K to buy a new car for personal use. The interest on that $40K is not deductible because you are using it for non-income producing purposes.
If you had an offset account, your loan never dropped from $400K even though interest was being calculated on $300K (and then $340K). This is because an offset account is a completely separate "bank account" to your loan account. Therefore the whole amount of interest will continue to be deductible.
This minor difference (redraw vs offset) is often over looked, but you've ELI5'ed this perfectly!
It's not really the same. I have to keep 2-3k in a transaction account because redraw isn't instant. I'd rather that 2-3k was ofsetting my mortgage rather than just sitting there doing nothing.
Thanks for your explanation, just one last question. Does negative gearing just apply to the investment loan and not owner occupier loan? I have a homeloan of $505k and paid off $250k, I am thinking to withdraw $30k to buy a car for BUSINESS use, so the interest on $30k will be deductible?
This is not financial advice and although I'm in finance/accounting, I'm not a tax accountant.
If you can clearly show the link (nexus) between the "loan" you have taken out and the asset you have purchased, yes. Eg if the amount you withdraw exactly matches purchase price, little time between withdrawal and sale, etc. Various factors would be considered if it's not an open and shut case.
Sometimes it's safer to just take out a separate loan though, that way there is no dispute.
Thanks again for your advice. I have learnt something today. I have an accountant who do all my individual and business taxes. It's better to know something before asking her about that. Thanks, have a good day.
I've been with them for about 4 years & no complaints from me. Was a bit of a hassle switching over to them but couldn't be happier since.
I was trying to apply for off the plan but too bad ubank wouldn't do it. Would be better if they give offset account.
How is their valuation compared to banks?
My one is refinance. No valuation was required, but i was on low LVR.
I got a better value than the expected.Much Much better than the Council Valuation. But not sure about the other Banks.
Council valuation on land only.
How do you know what value you got? Because they don't tell you.
I asked and They did tell me.Then, I increased my borrowings. all the extra borrowings went into redraws. I thought it might be useful in future.
Customer support via online chat is very quick and pretty good. I do not need to waste time on phone.
Do they have offset account?
no unfortunately.
Nah, Unfortunately not. I was looking for the same thing
No but unlimited redraws for free. $1k minimum.
I am on ubank loan. I tried redraw $350 and it went without problem.
The minimum redraw is actually $100.
Either way no big deal. Weird that it says $1k on website:
https://www.ubank.com.au/home-loans/why-choose-us
Redraw
Easily access extra cash if you’re ahead of scheduled repayments (min $1,000).
Unlike other lenders, the redraw is not instant so if you need money urgently this will be a problem.
Well shit. When I locked in my rate last year, I didn't think the Tories would (profanity) up the economy this quickly. Goddamit!
Fixed at what for how long? You could still end up being better off over the long term if interest rates increase later on.
I can't see interest rates going up any time soon. Well.. Going up dramatically atleast.
Fixed for 2-3 years is fine. On a 30 year loan, sometimes you win, sometimes you lose.
With fixing fees taken into account plus effectively betting against bankers you pretty much always lose by fixing.
I fixed last year at 4.74%. Depending on you loan size and break fees you could be better off. Some brokers offer incintives like cask back. When I did the math I am WAY better off breaking and going to a lower rate.
I suggest you sit down and do the math you will be surprised how much you could save.
Since the interest rates are so low at the moment, is it not more beneficial to take out a home loan at a fixed rate?
Every bank has a chief economist. They are to make sure bank makes money from fixed loan. If you think you can win them in betting future interest rate, then use fixed loan.
They lend above funding cost from money market, then sell it off. No one would take on all the risk themselves.
But banks also need make sure they make money.
Remember if the australians as a whole take $1 more dollar of fixed loan, and then that is $1 less for variable loan. Fixed and variable have to make about the percentage of loan amount for a bank.
This is what they want you to do with the rates most likely falling further.
Fixed is generally understood to be the riskier, even though it might not sound that way. The bank calculates that rate based on their expected returns based on cashflows derived from forward variable rates, and the casino never will have odds in the punters favour.
In addition to that there are often restrictions and penalties against early repayments for those products I believe.
Thanks for all the replies, currently looking at purchasing a house, and it is all pretty daunting! Want to make the best decision to save $, going to have to do a fair more bit of research.
I think of a fixed rate as buying insurance. Probably, you'll pay more, just the same as your running costs go up if you buy insurance for your car. However, if you're in an accident and wouldn't be able to replace your car without insurance, then it will often be smart to buy insurance.
A fixed rate works much the same. Even if the smartest people in the world don't expect rates to go up by more than x% (where x is the absolute max you can afford) there is always at least a small risk that they could. The question then becomes how much are you willing to pay to insure that risk, especially if you are effectively betting your house?
There are fixed loans out there with 100% offset. I fixed with TMB 2yrs ago at 4.25 w/ offset. Happy enough.
How? Where? Never heard of this before unless you're on a split of variable and fixed.
Auswide Bank have a true 100% offset including redraw with their fixed rate loans. Please PM me if you'd like to know more about this product. And, no you don't have to have a variable split. It can all be fixed.
Link?
If I am refinancing,do I need to produce my salary evidence and other sources again?
Yep
Yes and sometimes they can even ask for revaluation of the house as well.
We have had our home loan with Ubank for 4.5 years now. Such a simple product. Best interest rate. No fees. Redraw whenever we want. Extremely happy with them.
Does anyone knows how conservative is Ubank's valuation process? Thanks
From my experience was probably 30k-50k under what I could sell it for.. Last 2 times I had the same house done
Quick run! someone is going to pinch all the money.
If I refinace to Ubank, should I tell the cuurent bank about changing to other bank?
You don't have to, but I suppose you can tell your existing bank and see if they would reduce your rate just to keep you.
Thx, I guess they even give me better offer, it can't beat Ubank one.
Really depends. I changed from ing to ubank. For annual fee ing is $350 more for me.
Looking back, i shouldn't have change.
Ing provides:
- instant redraw
- much more powerful mobile app.
- offset
- mich better customer service.
All missing from ubank.
Also the switch fee is about $1K.
The question is whether you think these extras are worth $350.
I think it's worth it.
@scheps: Think of the redraws and extra payments as a "manual offset account". Not as efficient as a true offset account, but the low rate makes up for it.
Any problem with them raising interest rates of existing customers but keep the low advertised rates to lure new customers?
UBank haven't done that to me in the years I've been with them. However if they are giving further disc to 'lure new customers', they won't automatically give this to existing customers. Usually a call will fix this if you have been paying on time etc but YMMV.
Also for existing people that arent on this rate, make sure you call them.. I did this a couple of weeks ago and despite them saying it was only for new customers they changed it eventually after speaking to the right person.. Cheers
GREAT Rate!
Can someone tell me why would someone get A loan from big banks when places like Ubank offering a far better rate? Am I missing something here?
Thanks
The main reason i cant think of is that people may already have other services like bank account with the bank and they will just add this home loan to other services. Other reason may be that Ubank and similar banks are fully online so if you want some face to face banking then you would go to banks with physical presence like the big 4. Other may be the big banks spend more on marketing and are more present in marketing.
What Ozshaz said. Also, 2 points come to mind.
1) Trust and branding. In a very simplistic approach, why would someone drive a Merc when a Toyota does the same job? Gets you from point A to B right? Money is money right?
2) Different banks have different serviceability calculators, with some banks being more generous than others. If it's a vanilla case, i.e. 2 PAYG servicing an Owner Occupied Home, really the biggest consideration would be rate. If you're with on your 3rd or 4th investment property and need to squeeze a larger borrowing capacity but has a higher rate, you'd take the one with the higher capacity compared to the one with low rate but a lower borrowing capacity since your returns would be better.
Source: I'm a mortgage broker.
Thanks a ton, OZSHAZ and MrBigglesworth
This probably wont affect many but when I applied to Ubank in Feb for a loan to pay out my partner after as separation they said they could not offer me a loan as they had no product that covered my situation? That's with only 50% LVR.
If your loan is already with NAB, forget refinancing with UBank… they just don't seem to do it… because it's not new business…
NOOO!!!
Wrong, I moved from nab to ubank.
3.63% https://www.loans.com.au