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February Rate Review

By Rhianna Poole

With the Reserve Bank stirring the cash rate from its slumber on February 3, Australian lenders are now in the race to provide better deals to existing and potential customers.

While many have passed on the cash rate cut, Australians depending on this metric alone may be missing out on increased savings. When it comes to your individual home loan, it’s not the cut that counts.

Westpac stirred particular interest when the major bank announced a cut of 0.28 percentage points, even though the cash rate only dropped by 0.25 percentage points. They could afford this because, like many other lenders, they have not passed every cash rate cut in full.

Another piece of good news for those in the property market is that some experts forecast further cash rate cuts, which means the mortgage repayments for variable rate home loans may keep dropping as well. With that being said, now is the time to be check the market for the lowest rates possible. Once you compare repayments on potential home loans, you’ll get a much clearer indication of the savings the cash rate may have opened up – from there it’s up to you to find the best deal.

Read more: Choosing between a fixed & variable loan

Lowest variable home loans: Dream Essentials: 4.23% p.a.

You need to have at least 20% deposit for this home loan, as the maximum you can borrow is 80% of the property value. If you fit this category, You’ll have access to split your loan into up to five different fixed terms and variable, make additional repayments and redraw facility. Just keep in mind that the fees for this loan total $520, and terminating early will set you back at least another $300.

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HSBC Home Value: 4.48% p.a.

It’s always nice when there’s no ongoing fees associated with a loan, and that’s something this loan ensures. It’s also portable, so if you move you can keep the same home loan with you. An important consideration is that you’ll be charged $40 per redraw, so you need to avoid overcommitting to repayments or you will be stung.

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Greater Building Society Discount Ultimate: 4.49% p.a.

With the cash rate falling, 100% offset accounts become more attractive. This is because it’s likely you’ll save more in interest than you would if you put your money into a savings account. This loan comes with one, which is a plus, however a $375 annual fee could bottom out it’s value to you.

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Lowest 3-year fixed home loans:

ME Bank Standard Fixed Rate: 4.28% p.a.

With a low rate and no application fee, this loan could springboard potential home buyers into the market quite quickly. You can also split portions of the loan, and while you can make redraws you aren’t able to deposit additional funds, so watching your spending is crucial in this instance. You’ll also have to pay a $200 valuation fee.

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Greater Building Society Ultimate Fixed Rate: 4.29% p.a.

This home loan has a $375 annual fee. If you’re still reading, you’d be happy to know that you get considerable features for the money you pay, including free redraws, flexible repayment options and discounts on other Greater Building Society products.

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IMB Fixed Rate Home Loan: 4.34% p.a.

Free redraws and split facilities open up the freedom of this loan, and its portability opens up your options also. With that being said, the fees associated with this loan reach $840 ($72 of this being an annual occurrence), which may make it less portable in terms of your financial situation.

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Story by  Michelle Hutchison view it here

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