Everything to know about Home Loans for teachers

Everything to know about Home Loans for teachers

Joanne Ly - 14 May, 2020

As housing costs and interest rates begin to rise in Australia, teachers can find it difficult to get home loan approval as most banks don’t have a structured process on how to assess their income over a year. Not only that, but there is confusion on how to measure the income of casual teachers who do not have a consistent income stream and can work casual indefinitely.  Luckily, there are several organisations and lenders that offer home loans and mortgage help for teachers, most notably Teachers Mutual Bank.

Teachers Mutual Bank provides credit cards, home loans, personal loans, savings and transaction accounts, term deposits, life insurance, home insurance, car insurance and travel insurance. They have helped Australian education sector employees and their families secure homes and mortgages with banking services and advice. Teachers Mutual Bank provide banking experiences tailored to teacher’s such as Business Relationship Managers who will visit the school for consultations, or Mobile Lenders who can meet at a time and place that suits. Teachers can also use their mobile app if they can’t chat face to face. Teachers Mutual Bank continually invests in the education sector and has competitive interest rates that will benefit those in the education industry in the long run.

Teachers Mutual Bank home loan features:

  • Deposit size. Some mortgages allow you to borrow up to 95% of the property’s value. You can also borrow up to 85% of the property value on a variable home loan. Many have a maximum insured LVR of 80-90%.
  • Offset account available. Many of Teachers Mutual Bank’s products come with a 100% offset facility, including some which you can’t get with other lenders, such as the Teachers Mutual Bank Fixed Option Home Loan and the Teachers Mutual Bank Solutions Plus Home Loan.
  • Redraw facility available. Make additional repayments on your loan and have the ability to withdraw the money from your bank if needed. This is available on most of their home loan and personal loan products.
  • Exclusive membership. Teachers Mutual Bank predominantly services teachers, who are either currently working, retired or studying for future employment in the industry, as well as their immediate family members.

What types of loans are available at Teachers Mutual Bank?

Solutions Plus Home Loan

The Solution Plus Home Loan offers discounted rates for the life of the loan and is only available to eligible members with Teachers Mutual Bank’s Rewards Package. When you sign up with the Rewards Package, you will get benefits and discounts to further compliment your home loan. On the Solutions Plus Home Loan, you can borrow up to 95% of the property value including Lenders Mortgage Insurance. You also get access to a fee free redraw facility to access any additional repayments you’ve made and a 100% offset facility so you can pay off your home loan quicker with no penalties for early repayment.

Eligible Criteria applies when joining the Rewards Package at Teachers Mutual Bank. You will need to be a registered user of Teacher Mutual Bank’s online banking platform, have a current Everyday Direct account and have a minimum home loan amount of $150,000. Those who do join the Rewards Package will also gain access to a number of benefits and discounts such as a discounted variable interest rate, no application fees, top up fees waived and a discount of up to 10% of home insurance provided by Allianz.

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Fixed Rate Home Loan

With a Fixed Rate Home Loan, you can secure a fixed interest rate for up to 5 years and be confident knowing your mortgage payments won’t change for the duration of that period. At the end of the fixed period, Teacher Mutuals Bank will revert your home loan to their Flexi Choice Home Loan with a variable interest rate, or you can choose to revert back to a fixed home loan for another period.

Features of the Fixed Rate loans include no ongoing fees and the ability to split loans. You can also borrow up to 95% of the property value including Lenders Mortgage Insurance. Teachers Mutual Banks also offers a Fixed Rate Lock Fee so that you can lock in an interest rate for a period of up to 90 days from the date of your application.

Classic Home Loan

If you’re looking for a low and simple variable rate, Teachers Mutual Bank is offering a special low interest rate for the first 12 months of the mortgage. The home loan is also a Certified Responsible Investment, which means the money they bank is lending you does not come from any damaging industries. The low interest rate given will not change for the first 12 months of your home loan, which ensures there’s no repayment fees or changes.

You can also take advantage of their home loan benefits with access to unlimited additional repayments and fee-free redraw facilities. There’s no penalty for early repayment if you happen to pay off your loan sooner, and no monthly fees associated with your home loan.

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My First Home Loan

This home loan is specially designed to help out first home buyers to get their foot into the property market. Teachers Mutual Bank have tailored a range of benefits for first home owners and can personalise a package that suits you, on consultation. On top of no monthly fees and a fee-free redraw facility for additional repayments, you will have the ability to pause your repayments and also make flexible repayments, upon consulting with the bank.

Upon joining Teachers Mutual Bank on My First home loan, you’ll also be able to enjoy a discounted variable interest rate for the life of the loan (not just the first year). If you apply for any Government grants such as The First Home Owners Grant, you can use that as part of your settlement amount on the property. The Government also has a First Home Loan Deposit Scheme available which allows first home buyers to purchase a home with as little as 5% deposit without having to pay Lenders Mortgage Insurance.

home loans for teachers

Flexi Choice Home Loan

The Flexible home loan can be used for owner occupied purchases, vacant land, renovations, or any worthwhile purpose. The home loan is suitable for those with changing needs as it comes with a variety of features.

Features of the Flexi Choice home loan include:

  • Flexible repayments
  • Make unlimited additional repayments
  • Repayment pause
  • Ability to split loan
  • A variable interest rate
  • No ongoing fees
  • No penalty for early repayment if you pay your loan off sooner
  • Top up your account
  • 100% Offset facility giving you the opportunity to pay off your home loan sooner
  • No monthly fees
  • A fee free redraw facility to access additional repayments you’ve made
  • Ability to split loan
  • Borrow up to 95% of the property value

Interest Only Variable Home Loan

An interest only variable home loan is the smarter choice for those planning any home construction. This loan is available to be used for owner occupied purchases, vacant land, renovations or any other acceptable purpose. There are no monthly fees when joining and you also get access to a 100% offset and redraw facility. The home loan is suitable for construction on interest only. Due to some business requirements, Teachers Mutual Bank have placed some restrictions on certain interest only home loans, but it’s best to contact them for further information.

How to apply for a Teachers Mutual Bank mortgage

To join and become eligible for Teachers Mutual Bank products, you must either be a teacher, another type of employee within the education sector or a family member of someone who is. There is specific eligibility criteria for specific products, but generally you must be over 18 years of age to apply, you must be a resident of Australia and you should be receiving a regular source of income. You will also need to become a shareholder to join – the fee is $10.

When you apply with Teachers Mutual Bank, they will require you to provide certain identification documents with your full name, date of birth and address (e.g. drivers licence, passport). You also need to present proof of income documents such as a recent payslip, and any relevant asset and liability documents so that they can thoroughly assess how much you can borrow.

What if I’m a casual worker?

Casual teachers find it harder to have their home loan approved as they don’t work full time hours and during school holidays, there’s often no source of income. When banks analyse your income, they might not approve your home loan. However, some lenders, including Teachers Mutual Bank will work off your gross year to date (YTD) income instead of your normal income to determine an average fortnightly salary. This makes it easier to be approved for a home loan – you will, however, be required to have been in the casual teaching position for at least 3 months and provide payslips showing consistent income over that period.

What about income from a second job?

Having a second job to supplement your income isn’t uncommon when you’re a teacher, especially those that are employed on a casual basis. This may be working as a self employed tutor, on a contract/freelance basis with other schools, or through a private education provider.

If you would like your second income to be calculated when applying for a teachers home loan, it generally has to be in the same line of work. Lenders will accept 100% of your second income if you can prove you’ve been working for 12 months at the job with regular income. However, if you’re self employed, you will need to show you have been working for at least 2-3 years and provide your tax returns, notice of assessments and a letter from an account to verify your income. Lenders can also consider less than three months worth of work history if you can prove you’re in a strong financial position with a clean credit history.

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What people think about Teachers Mutual Bank

The following reviews have been collated from the website Product Review.

“I’ve used this institution since I was at Teachers College. Very dependable and decent people. They are cautious about who they lend to, and how much they lend. That’s for good reasons. Compare them to the loan sharks that emerged in the banking royal commission. I’m lucky to have used their services as a teacher, lecturer and retiree. Useful for their credit card facilities alone” – Lance, NSW
“I switched to TCU after I began teaching. A rep came to the school to advertise their products and it wasn’t hard to convince me to close my bank account and open up an account with them. If I had joined earlier I would have probably put my mortgage with them. They have excellent saving rates (when I opened a saving account it was 8%) and very minimal fees. They also have a debit card that can also be used as a credit card and several ATMs are free to use (Rediteller and I think NAB are coming on board too).” – Michelle, NSW
“I would highly recommend getting into this Credit Union if you can. Once you are in, you can get family members in. It is a much better experience after being mistreated by banks. If you have only known banks, you do not know what you are missing. Give it a try! I can do everything over the internet, so the lack of branches is not a major concern. Using a Visa card that doubles as a debit card. Very low and reasonable fees.” – Jon, NSW

Words by Joanne Ly

You don’t need to leave your house to get an eChoice home loan consultation – As always, we will discuss your options over the phone – we’re here to make your home loan journey easier.

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