Until 30 June 2011, UBank is offering a 0.2% p.a. loyalty discount for the life of the loan on all new home loans refinanced through online application. At current standard variable rate of 6.79% p.a. this translates to 6.59% p.a. (comparison rate: 6.59% p.a.).
This is the lowest variable interest rate on offer by any bank in Australia. No establishment fees, no ongoing fees and no exit fees.
Referrer and referee each receive $20 after referee makes 5 settled card purchases within 30 days.
Do you have a link to NAB's site for this offer?
Don't have time to use URL shortener or find link on NAB site.
I was reading this news articel.
http://au.ibtimes.com/articles/149915/20110523/nab-sells-onl…
They only lend 80% of total value. What about NAB?
And that's a good thing. > 80% is sub prime territory.
Good and bad. If I am planning on getting a 500K I have no way to save up 100K in the near future.
Save the 100K. By the time you have the $500K house will be $300K anyway.
juicedpixels, what does that mean? Why the house will be 300K?
if you want a $500k loan, that's $3189.99 of repayments per month at ubank's low rates (and it would be higher anywhere else you could get a loan for >80%. for comparison, it would be $3299.99 using my current discounted NAB rate of 6.92%).
so let's assume that you can afford those repayments. that means that right now you could save AT LEAST that much per month BEFORE buying the house.
therefore, it would take you AT MOST 31 months to save a $100k deposit at $3189.99 a month (or 30 months at $3299.99 a month).
that's two and a half years to save the necessary deposit. not to mention:
1) if you can afford those repayments comfortably, then you should probably be able to save even MORE per month in the short term for the deposit.
2) if you are thinking of buying a house, you should ALREADY have started saving!
2-2.5 years of planning/saving to buy a house is nothing!!! i'd suggest that if you're planning on getting a $500k house and can't raise $100k deposit, maybe you need to plan better!!!
Don't forget that unless wildstone is living with his/her parents or otherwise rent free, he/she has to pay rent while also saving the deposit. That easy $3200 saved per month could easily have $2000 eaten from it in rent.
The First Home Saver Accounts incentive by the goverment gives 17% on the first $5500 saved per year, and in addition you receive interest from the bank aswell. Some terms apply to time frame for this.
http://www.ato.gov.au/content/00250962.htm
Re: First Home Savers Account. Need to deposit money over four years. Can't touch the money before the four years expire. If you change your mind about buying a house, the money must be put into superannuation.
This account has so many serious limitations that it has been a complete failure. None of the mainstream banks advertise these accounts, and last I checked only a few thousand people were signed up 2 years into the program's life. What if you want to buy a house after 2 or 3 years? Your money is happily locked away until you turn 60. Ridiculous.
I think you will find that the first home savings account has a 10 year life before you are forced to put it in super and if you open it at the rigjt time you can get at the money in 2 years and 2 days. If you buy house before then the money can be used to pay down a mortgage. These changes happened a couple of months ago.
@cluster: very fair comment re rent.
although, realistically, to be granted a loan with $3200 repayments, you should actually be able to save $4000 or more a month (because they are not going to loan you $500k if you can only JUST afford $3200 a month - they leave headroom).
so even with $2000 of rent, realistically you should still be able to save at least another $2000 per month in the short term (particularly if you're serious about buying a house). that makes it 4 years - again, not an inordinate amount of time to be planning to buy a house.
people these days are too impulsive and want everything NOW! i was actively looking for a house for 2 years before i bought mine, and seriously planning for it the last 5-10 years! pretty much my whole life i have been putting money away for it! now friends of mine say to me: "i'm thinking of buying a house, maybe in the next year or two"…well how much have you saved for a deposit? "oh nothing yet, just trying to pay off my credit card!"
but anyway, yes, definitely fair point on rent!
@Cluster: http://www.firsthomesaver.com.au/general/first-home-saver-ac… Legislation has been changed to allow contributions to a mortgage instead of only super if purchased < 4 years into the account.
Subprime lending is not based on lending amount but making loans to people who may have difficulty maintaining the repayment schedule.
Ppl who can't save a deposit won't be able to make repayments. Simple.
juciedpixels - Not true. With house prices the way they are today, 20% deposit takes a while to save. Lending say 85% to 90% of a house price is not necessarily sub-prime. To say that is to actually make sub prime sound legitimate.
What if you want to borrow 95-100% and have 20% ready to put into an offset account?
atlas - Don't forget the lenders mortgage insurance cost. The more you borrow, the higher the percentage applied in calculating the insurance premium.
For example,
Borrow 100K = 1% x 100K
Borrow 110K = 1.1% x 110K
As you can see, the increase in premium is similar to compounding effect.
Paying a decent deposit means no mortgage insurance and a buffer against any future house price falls. I wish every bank enforced 20% minimum deposits. It would make houses harder to buy for people without savings, but those house prices wouldn't be so high in the first place. Too many people have borrowed 95%+ and gone on a spending spree.
Housing prices are high as we don't build enough houses per year to meet demand. It shouldn't matter if you have a smaller deposit, as long as you can comfortably make the repayments.
Thats true but if you aren't capable of savings x% of your income to get that deposit then what makes you think you can pay a large debt for the next 20-30 years consistently?
Of course there is always an exception to the rule but you get what i mean.
The argument that house prices are so high because we don't build enough has never made much sense to me. If house prices are high then someone, somewhere, is making a lot of money on the house. If they're making a lot of money why don't they build even more and rake in more profit? One could argue that the profit per house would fall as prices soften, but the builder would still be making more money overall.
Areas in the USA and Spain built houses like crazy 2000-2006. So much so that there are now hundreds of thousands of surplus dwellings across both nations. Yet prices still skyrocketed when the excess was being built.
Prices rise when there is a shortage, prices rise when there is a surplus. The outcome of the latter is an unsustainable bubble, but the former can be a bubble too if it's built on unsustainable growth in credit.
agreed, some ppl are not good at saving but are good at paying off debts. everyone is different.
It's a great deal and I'm a fan of UBank, but I have a few questions for the bank:
How long does UBank intend to strongly undercut the competition? The rate is variable and the offer expires on June 30. Home loans last 25 years, so saving a bit for a few months and paying the same as everyone else later makes no real difference. UBank gives a 0.2% loyalty bonus for the life of the loan, but the actual future rate in relation to other banks is anyone's guess.
Australian banks have sourced much of their funding for our housing boom from overseas. Now that credit rating agencies are starting to decrease Australian bank ratings (including UBank's parent, NAB), can NAB guarantee they will continue to be much cheaper than the competition? Or will they use the 2009 Westpac 'banana smoothie' excuse that 'sorry, cost of money is higher now and you'll all be paying more'?
Very good points…doubt we will ever get an answer. 6.59% sounds great though!
Very good points.
Ubank have been known to set their savings rates high in the past and screw customers with no interest rate increases, so they'res no reason why they wouldn't start raising rates willy nilly when everyone has signed up.
That's their style.
at least no exit fee is a plus… would make it easy to switch… although, it can be a bit dodgy where you don't pay exit fee's you do however pay other lawyer fees….
True - but they are still the highest at 6.51% p.a variable (if you have direct deposits of $200 per month) if not the 6.01%
Despite that, UBank is still the market leader. I can't complain.
Are these loans portable? Have look at their loan offer documents, how about settlement and discharge and loan variation fees, these are administrative costs not built into the interest rate which may be lower, its VARIABLE Interest rate guys, not fixed!!
spooky - I'm not sure what you're trying to get at here? All loans have fees in one form or another. It's just a matter of identifying those with the lowest fees. It appears that you have found one which has no settlement/discharge/loan variation fees?
Yes it's variable rate loan and the comparison is done against other variable rate loans in the market. This is not a place to compare variable vs fixed rate loans.
Delfredo,appears you are not an employee of UBank? Simple mathematics here, just to save fraction of the introductory variable rate Does not equal as savings to borrowers on other loan variation fees which is different to ongoin fees being nil here, offering low interest rate such as this is enticing customers!!
Ubank should be disclosing those other fees now, not at time of settlement of new loan- these fees do amount to large amounts- Also, there is no guarantee this variable rate will NOT increase and overtake other Banks Variable Rate once UBank grabs the market share, what will borrowers do, refinance again?
spooky - This is not an introductory rate, it's 0.2% discount off the standard rate for the life of the loan. I do not work for UBank but I expect these fees to be disclosed upon approval of loan application (not on settlement). Alternatively you should have had the opportunity to inquire.
Yes, no guarantee that the rate will not increase. It appears that you got guarantees from other banks that they will not increase their variable rate on home loans?
You still haven't provided us with an example of another variable home loan that is cheaper than this, for us to consider.
Delfredo, UBank offering a 0.2% p.a. loyalty discount for the life of the loan, enticing new business,capturing market share and hiking up the variable rate higher than other lenders is anticipated (Technically, it is an intro rate).I dont have to prove Ubanks loan variation and other fees are higher than other lenders,the full product disclosure statement should be available on Ubank website now, not at time of application, offering low interest rate is a marketing gimmick and playing with peoples emotions
There are no exit fees from what I can gather so if they bait and raise, you just pack your bags and find another borrower. Its UBank backed by NAB so I doubt they would do that for a small win. My guess is they make their money out of not providing the extra paper work associated with mortgages.
No new home loans means no settlements departments required.
80% max LVR means no mortgage insurance hassles.
etc.
I'm not from the bank and I share the same concern as you. However I will take the view that an online business model will always have a lower cost structure than one that has to maintain hundreds of branches. It is true that variable rate on UBank loans can increase in the future. If it does, then I am reasonably confident that the other Big 4 will do the same. That is the risk that one has to take on a variable rate loan as opposed to fixed rate.
Good question, but the same question applies equally to every lender, so it really is a moot issue. Presently, interest rate 'safety' is with the major lenders, that cycle will once again change in the future, but for now it makes sense to go with the flow.
Hi Cluster, as this is a variable homeloan, the SVR (standard variable rate) may change, but we are currently offering a 0.2% Loyalty Discount, for the life of the loan. UHomeLoan also has no application fees, no admin fees, no break costs, and no penalties for additional repayments.
I hope this further clarifies, and please let me know if you have any questions. Speak soon, Emma T
Emma - does the loan has to be approved by 30 June to get the rate?
Hi eastpack101, to receive the Loyalty Discount, you have to submit your application online on or before 30 June 2011. Speak soon, Emma T
Emma - is there any other fees required when applying for this loan, such as valuation fee, legal fee, etc?
Hi eastpack101, standard fees between application and settlement are all absorbed by UBank (valuation, credit check, solicitor's etc).
Important to note that during the settlement process there are costs to be covered, which aren't UBank costs. These include solicitor’s fees from the existing lender, government mortgage registration fee (generally $100 - $200 depending on which state you’re in), exit fees/break costs from existing lender, plus any unpaid repayment amount with existing lender.
Speak soon, Emma T
good rate but no offset account..
But I assume free unlimited deposits and redraws.
Can someone clarify the difference other than transfer times in and out of the account (assuming an offset account could be used as an everyday transaction account)
Looks like it is free redraw and extra payment (minimum $1000 redraw though).
Incredibly no dishonour fees (failed debits, cheques): http://www.ubank.com.au/ub/ShowProperty/WLP%20Repository/UBa…
True. This will be an issue for investment loans (as compared to owner occupied loans). Tax office may not allow tax deduction at full interest amount once a redraw has been made. No problem for an offset account.
delfredo - can you please explain this a little bit? does it mean we can't withdraw if we want to claim the interest as tax deduction? thanks in advance.
Please see following and obtain professional advice.
http://law.ato.gov.au/atolaw/view.htm?locid='DTR/TR1999D3/NA…
thanks for the link
.
Agree — offset account is such a useful feature.
I would be interested to see how CBA will retaliate. In the previous battle when NAB offered to pay exit fees of up to $700 to CBA and Westpac customers to leave, CBA counter offered with $1,200 bonus to NAB customers to jump ship.
I suspect that this time it will be done via BankWest, their offshoot with a lower cost model.
Far out that is some aggressive pricing!
Does anyone know all the fees involved for me to switch from CBA to this loan?
Depends if you are on a fixed interest rate — if you are, it may cost alot — otherwise I'd imagine it would be in the vicinity of $1200 (but I'll stand corrected).
The best place to look for the exit fees applicable would be the document that has your signature next to it.
If it's a consumer loan, they must disclose all those exit fees etc in plain language.
CBA had a low cost home loan brand called homepath that they shut down a couple of years ago it was only around for 9 years . It would be good to here from some people who were with them when the Cba shut the brand down
Has anyone thought, once you all refinance, to UBank, who then captures market share then remember these are variable home loans, it can overtake the variable rate offered by the major banks?What will you do then, refinance again?
I am a fan of UBank, but I also wonder how long they can maintain this competitive rate. It's not as if this rate is a fixed margin below another reference rate (e.g. 1.2% below standard variable rate). If it was, then I would jump in.
ANZ has just offered me 1% below their standard variable rate for the life of the loan. This works out at 6.80% which is actually very good, but not as good as UBank.
I think getting a bigger discount (e.g. 1%) is more sensible than getting the lowest rate necessarily. Even though NAB has the lowest standard variable rate, it may not in the future. Thus, the discount becomes important. However, as UBank doesn't work off a discount, it's hard to know where their rates will go. If you knew that they would move in line with NAB rates (e.g. NAB goes up 0.30 and UBank goes up with 0.30) then this deal is a ripper. But we don't know that.
Then again, no exit fees with UBank, and no exit fees with ANYONE from 1 July (they'll be banned), so the only hassle is administrative costs with switching.
I was previously with Homepath. All was fine until they decided to close the business - they then made things very inflexible. I think UBank is very different to Homepath though.
How did you get 1% off ANZ's standard variable rate? Is it a negotiated deal? I can't find it on their website.
Yes, negotiated. They seem to be doing deals at the moment. Call your local mobile lender.
If a big bank offers you a 1% rate (after negotiation) it just goes to show how much they are ripping of 99% of their customers as far as im concerned!
If it wasn't for the ING's and other online providers, we would all be screwed.
Thanks! Do you mind telling me if the loan value to which the 1% discount applies to, is over $600K or under $600K? I understand that ANZ discount offer is tiered. You can PM me if you prefer.
Wow, they are really getting desperate now aren't they? But as usual, this 'deal' by far favours the bank… as soon as they have reeled in enough starry-eyed optimists, they will slam the cage doors shut and bam! They will raise the rate again at whim.
I hope OZbargainers are savvy enough to fall for this - it is a terrible time to buy property and it is only a matter of time before Australia's massively overvalued property market (highest in the world! Awesome.) crashes. Hard.
who said anything about buying? this is refinancing with no exit fees. If things goes south, jump ship
we still need to pay exit fees with current lender (depends on t&c with current lender)
I am not happy. I recently changed jobs and am on probation.
I do not qualify for this loan….and I am not sure if contacting uBank will do any good.
I am going to State Custodians as my 3 year special honeymoon period with Commbank expires in July.
If you cant get this, talk to a broker - ING have 6.89 variable at the moment and less lending restrictions than UBank.
Just negotiate with CBA
Good luck on negotiating with CBA. I jump ship from CBA to NAB 2 months ago.
They don't give a dime about me moving on even I told them they will have another business of 300k on top of what I was owing them.
Well I did & so have others. tchu not a negotiator man.
This is a great deal. A quick question: Is it possible to have the property valued by the bank before applying, to determine whether or not the applicant has sufficient equity (i.e. 20%) to qualify for a loan?
Just apply. If you don't have enough equity, it will just be turned down and cost you nothing.
Thanks. For anyone that is interested, I note that UBank has a tool for determining the property's estimated value, which is accessible from Step 1 of the Application: http://apply.ubank.com.au/rpdata/index.html. Unfortunately, it didn't work for me (No estimate found for this address), but others may have more success.
Has any1 had success with that tool? Won't work for me
Why can't I get this for a new loan? Seems like a stupid restriction to me.
for those refinancing from nab to ubank and vice versa there really should not be any fees. there will be no mortgage registration or discharge. the nab charges $200 for attendance of settlement and $150 for preparation of mortgage. Since there won't be any of those it really should cost nothing. the other banks will be different. I can't seem to find any fees on the ubank website
It seems that the ubank mortgage will be registered under advantage trustees so there will be the preparation of discharge of mortgage and attendance of settlement still payable for nab customers and additional gvt mortgage registration and discharge fees. Total cost will be around $560 for nab customers to refinance to ubank.
Time to say bye bye to dodgy myrate with this offer. Can anyone tell me if there is stamp duty on mortgages in WA?? A few pages say there is, some say there isn't.
hey daveaus why do you think myrate is dodgy?
if I can comment, it is because their advertised rate (for new customer) now is much lower than the rate for existing customer.
very nearly thinking of leaving my bankwest honeymoon rate of 6.88 for this loan.
1 year left of honeymoon rate.. gotta work out all the discharge fees though.
It seemed like a good deal for me, but after checking with Ubank I found out that you can only redraw by phoning them, rather than through online banking. So you don't get the full freedom of moving money back and forth as you want online. Their terms and conditions also have some conditions which seem to imply they can prevent you from redrawing your money. Is it normal for banks to control your redraw this way? It makes me a bit cautious.
yeah thats what i love so much about bank west, free easy redraws the way it should be.
and being able to bpay etc.. directly from the account is good too, wonder if they will negotiate a better rate
I think I will try to negotiate with my bank before trying to change. Not having straightforward access to my redraw would make me nervous.
I sent this off to my contact there who provided our loan for us, he is a friend of a friend, will see what he comes back with.
doubt they will re negotiate, its over 200 bux a month more (on the rate cuter)
a lady give us a call today and checking with everything.
criteria with them from my side experience is pretty strict. She decline my application due to so many leads of income she mention cannot be accepted.
Little disappointed but worst case now is to stick with nab 6.92 at the moment.
So I hope u all can get in smoothly. (for want good rates and value loan. if you also want good rate 6.59)
How did you manage to get 6.92% from nab? That's a 0.75% discount and their website only shows 0.7%. Are you borrowing a huge amount (eg. >500K)?
delfredo - that's corporate discount if you or you have a family work at coles group ogranisation and no package fees of $395 for first year.
this is not a bad deal at all in the market now. but anyway this deal is no where near bargain as ubank 6.59 to be honest… I will book for a short holiday if i got this ubank loan but unfortnately the just the nasty banking game force us out for it.
same deal for NAB shareholders, i believe. i'm pretty sure that's why i'm on 6.92% too.
I've been offered 6.82% from a nab lender (0.85% lifetime discount). I'm not a shareholder nor is this a take up of a corporate discount. Just an individual deal.
thanks, man, cant wait till we have 20% of our house value… we started off with 10% and all the fee's etc paid,
but once your in the house its so much harder to save extra $$$
nice one!
@wisc have you valued your house recently? If the value has gone up you could be closer to 80%
opps sorry stopped monitoring this… we only bought the house in december, so will probably take a few more months before the value goes upto 80% ;)
I recently applied for this Ubank home loan and got declined, because apparently with my apartment being in Alexandria (Sydney), Ubank can only lend us up to 70% of the total value. I'm like, WTF? Their website only says "up to maximum 80%" and the worst thing is, their website won't tell me why my applicationw as automatically rejected. I only found out this "70%" restriction when I called them up.
Has anyone experiendced similar issues as mine?
I found Ubank website ads misleading and dishonest. =( They could have put a warning of small print on the website. It's totally wasting my time…
I'm now looking to switch to NAB or St George, from my current bank (Bank West).
I thought NAB were offering exclusive online rates at 6.59 as well.
(Ubank backed by NAB).