After the Reserve Bank dropped the cash rate at the February meeting, providers scuttled to pass on the cuts to their variable rate home loans as quickly as possible. If your lender hasn’t passed on the cuts yet they’re trailing behind, however now more of the onus is on you, to make sure you’re getting the most out of the lower rates. The best way to do this is bite the bullet and make extra repayments.
March statement: RBA keeps interest rates on hold
Additional repayments have a compounding savings effect because as you repay more you’ll also be saving interest on future payments. With more rate cuts predicted for the near future, choosing to make additional repayments now could have even more collateral if rates continue to go down, so now is the time to take advantage of any extra financial padding you might have.
Read more: Choosing between a fixed and variable home loan
Lowest variable rate home loans that allow additional payments:
Loans.com.au Dream Home Loan Essentials: 4.23% p.a.
You won’t have the option of an offset account with this loan however, it has free redraw and allows additional repayments. Once you get past a $300 settlement fee, you’ll benefit from the lowest variable rate.
Bank of Queensland Discount Variable Rate Home Loan: 4.24% p.a.
This loan would probably suit high-end homeowners looking to upsize, as it has a minimum loan requirement of $1 million and only allows for an 80 percent Loan-to-value ratio (LVR). Once this and the annual service fee of $395 are considered, there are also benefits such as split and redraw facilities and a 100 percent offset account.
UBank UHomeLoan: 4.29% p.a.
A rare feature of this loan is that it has no sign up fees – that means no application, settlement, valuation or legal fees. It also has no ongoing monthly fees. It’s also portable, allows split options and unlimited free redraws, so you’ll have some cushy padding if you decide to go for this loan. With that being said, you need at least a 20 percent deposit in order to apply for this product, and there are also some specific eligibility rules you may need to consider.
Lowest 3-year fixed that allow additional payments:
Newcastle Permanent: 4.19% p.a.
This loan currently has a $1,000 cash back refinancing offer as well as the lowest three-year rate, so if you’ve been searching for a fixed loan since the cash rate change then you may be in luck. With no annual or ongoing service fees, this could boost your property market prowess. One drawback is that while you can make unlimited additional payments, you won’t be able to redraw them at all, so choose wisely!
Loans.com.au Dream: 4.29% p.a.
Solely-online providers can be a massive deal-breaker for those looking for home loans. For what they lack in a store-front presence they make up for with usually cheaper deals. This loan also has the benefit of additional repayments, split options, flexible repayment and rate lock options. There’s no redraw facility so you’ll need to make use of additional repayments with a hint of caution.
Greater Building Society Ultimate: 4.29% p.a.
This loan attracts an annual fee of $375, as its full benefits are designed to be used in conjunction with other Greater Building Society products. Aside from this, there’s no application fee and they offer discounts on your home and contents insurance if you decide to go with this option. It’s worth noting that you need to be a NSW or QLD resident in order to apply for this loan.
Story by Michelle Hutchison
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