- 1 Nov, 2018

Cheapest Home Loans

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As an investor, you want to find the cheapest home loan possible as this frees up cash flow. But, with lenders tightening up their investment portfolios and raising investment loan rates, this is becoming harder to achieve. However, the good news is market conditions are still favourable for investing if you can find the right lender.


Current Market Conditions

Nationally housing affordability is growing due to Australian median home prices falling further and marginal growth in wages. The rise in affordability also coincides with the Reserve Bank of Australia’s (RBA) latest decision to leave the official cash rate on hold at 1.5% for another month.

What’s the bottom line? Well, with the Australian housing market worth $7.3 trillion it makes up a sizeable portion of the Australian economy. Of this market, Sydney and Melbourne make up 60% of the market share. So, price fluctuations in these cities have a considerable impact on what happens across the market nationally, which, in turn, affects the Australian economy and consumer confidence. Consequently, these markets influence RBA rate settings, and the outlook for economic growth.

If you’re currently looking for an investment property, then keep reading.

Why Investing Now Makes Sense

Now, if you’re asking yourself, Why do I want to invest in a slowing market? Then, you need to consider a couple of factors.

  1. Firstly, median home values have fallen. As a result, you can buy property for less.
  2. Secondly, interest rates are still very low. Therefore, as an investor, you’re paying less to buy property.
  3. Thirdly, lower property prices mean needing less of a deposit.

So, given that investing is still favourable, how do you find the right lender and home loan?

Finding the Right Lender

While lenders have divided owner-occupier and investor home loans, and increased investment loan rates, bargains are still on offer. In fact, some lenders have investment loans starting around 3.79%. Of course, rates depend on many factors such as:

  • Amount borrowed – amount you need to buy the property.
  • Property price – value of the property you’re buying.
  • Loan term – number of years your loan is over.
  • Repayment type – principal and interest or interest only.

To find the right lender, it’s important to consider your financial circumstances. Thus, you need to figure out how much you can afford to borrow, what loan features you need, and the interest rate type. Other considerations are repayment frequency, your deposit size and existing assets and debts.

When looking for the right lender, consider the loan range of the product and interest and comparison rate. Also, review the repayment amount and loan-to-value-ratio (LVR), as well as fees. These will help you figure out which lender suits your purposes.

Five of Our Best Investor Loans

There are hundreds of home loans on the market at any given time. So, wading your way through these is a little daunting. But, to help you narrow down your selection, we’ve pulled five of the best investor home loans on our panel out of the mix. These loans show you what is on offer and how little you can pay with the current rates.

The five best investor loans on our panel use the following criteria:

  • Rates – as of 30th October 2018
  • Loan amount – $400,000
  • Property value – $ 500,000
  • Loan term – 30-years
  • Repayment type – principal and interest
  • Loan purpose – investor
  • Repayment frequency – monthly
  • Interest rate type – variable

 

Homeloans.com.au

Homeloans.com.au – Ultra Plus

The Ultra Plus loan product offered by Homeloans.com.au, comes with very competitive interest rates, however, they will vary based on how much you are borrowing and whether you choose a variable, fixed, or both with a split rate loan. Enjoy flexible repayment options and the freedom to pay down your mortgage quickly with unlimited additional repayments, either ongoing or as a lump sum. You do have the option to pay interest only, but keep in mind this choice will come with a rate surcharge. This loan includes the following features:

Features
Interest Rate3.97%
Comparison Rate4.13%
Offset AccountNo
Offset Cost$0
Redraw FacilityYes
Redraw Cost$0
LVR80%
Annual Fee$0
Monthly Fee$0
Application Fee$0
Monthly Repayment$1,902

 

Suncorp Bank

Suncorp – Back to Basics

Here is a low variable rate loan that can help you own your home faster. You’ll pay no ongoing account fees and have the freedom to make additional repayments or redraw when you want without having to pay any extra fees. This is a popular choice with first home buyers as you can borrow as much as 90% of the property value. This loan includes the following features:

Features
Interest Rate4.09%
Comparison Rate4.10%
Offset AccountNo
Offset Cost$0
Redraw FacilityYes
Redraw Cost$0
LVR90%
Annual Fee$0
Monthly Fee$0
Application Fee$600
Monthly Repayment$1,930

 

Heritage Bank

Heritage Bank – Discount Variable

For an affordable home loan, Heritage Bank offers a low rate variable loan product with no monthly service fees and one of the lowest rates in the country. While their Discount Variable loan doesn’t include an offset account, you can still pay down your loan faster with unlimited extra repayments. And, when you need to, you can access your additional payments with unlimited redraw. As with all of the home loan products from Heritage Bank, you have the option to take advantage of an interest-only repayment period to give you more flexibility in the first few years of your loan. This loan includes the following features:

Features
Interest Rate4.14%
Comparison Rate4.16%
Offset AccountNo
Offset Cost$0
Redraw FacilityYes
Redraw Cost$0
LVR80%
Annual Fee$0
Monthly Fee$0
Application Fee$0
Monthly Repayment$1,942

 

Macquarie Bank

Macquarie – Offset Home Loan

You could save a substantial sum by lowering your interest owed with an offset account – Macquarie lets you have up to ten fully transactional accounts with your loan. Combine this with a competitive rate and a Macquarie credit card with no annual fee for the life of your loan and you have a smart home loan for savvy borrowers. This loan includes the following features:

Features
Interest Rate4.19%
Comparison Rate4.44%
Offset AccountYes
Offset Cost$0
Redraw FacilityYes
Redraw Cost$0
LVR80%
Annual Fee$248
Monthly Fee$0
Application Fee$0
Monthly Repayment$1,953

 

ME Bank

ME Bank – Flexible Home Loan

Add a few flexible features to the Basic Home Loan offered by ME Bank, as well as a slightly higher variable rate, and you have the Flexible Home Loan. You can use an offset account to make your loan more affordable and can choose between a fixed, variable, and split rate option depending on which suits your financial goals. This loan includes the following features:

Features
Interest Rate4.19%
Comparison Rate4.59%
Offset AccountYes
Offset Cost$0
Redraw FacilityYes
Redraw Cost$0
LVR80%
Annual Fee$359
Monthly Fee$0
Application Fee$0
Monthly Repayment$1,953

 

Do you want to know more about the cheapest investor home loans available on our panel? Then contact eChoice, we can help you find out what loans you qualify for today. Plus, our brokers have access to 100’s of home loan products. So we’ll help find you a competitive mortgage.

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Things you should know:

The advice provided is general advice only as, in preparing it we did not take into account your lending objectives, financial situation or particular needs. Before making a decision on the basis of this advice, you should consider how appropriate the advice is to your particular lending needs and objectives. Terms and conditions, fees and charges and normal lending criteria apply. Information & interest rate is current as at 30th October 2018 & is subject to change. The comparison rate is based on a loan amount of $150,000 over a loan term of 25 years. WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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