How Can I Improve My Credit Score?

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While it can seem that a poor or even bad credit score is the end of any financial hope of securing a home loan, the good news is your credit score can be improved. However, it will take time and effort on your part, and a strategic, well-thought out plan to rectify any problems.

In order to fix or improve your credit score you firstly need to know what you should be focusing your time and energy on. This means obtaining a copy of your credit report, checking its accuracy and developing ways for you to manage your money better. Let’s look at how you can get the credit score you crave.

Related Text: ASIC’s new responsible lending guidelines aim to provide clarity on credit

Ways to Improve Your Credit Score

1. Obtain a copy of your credit report – Your credit report is a record of your financial history, which includes any credit applications, overdue payments and bankruptcies, as well as loan and credit repayments. This document gives you a rating based on how well you manage your money, which, in turn, gives a lender an indication of their level of risk.

To obtain a copy of your credit report contact www.mycreditfile.com.au. You can get a free copy of your credit report once every 12-months, or if you’ve applied for credit and it’s been declined, then you have 90-days from the date of your application to obtain a copy of your report.

2. Review your credit report – When your report arrives go through the document and make sure all entries are correct. If you find that there are debts listed which have been paid, then you need to contact the credit agency who sent you the report so that the errors can be changed.

3. Pay off debts – If you have any outstanding loans and debts, then start making regular payments on these. If you can, pay more than the minimum required payment. This will increase your credit score over time.

4. Reduce credit limits – If you have a credit card or cards then reduce the limits on these to the minimum level. Then pay off any outstanding balance. This will reduce the temptation to spend more than you can afford, and help you to get your finances under control.

5. Speak to creditors – If you’re having problems paying your bills, then contact the company you owe money to and make arrangements to pay back what you owe using a payment plan. This can help you to avoid incurring a bad payment record on your report, which will affect your credit score.

6. Seek professional advice – If you’re finding it difficult to manage your bills and to create a budget, then contact a budgeting assistance group. Financial advisers and other money management organisations can help you manage your money better and to devise a plan to get your finances under control.

Overall, be patient and persistent. You’ll develop a better credit score over time.

Do you need to improve your credit score? Then contact eChoice. we’ll help you to understand your credit report.


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 Rate 3.97%
Comparison Rate 4.13%
Offset Account No
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
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 Rate 4.09%
Comparison Rate 4.10%
Offset Account No
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 90%
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 Rate 4.14%
Comparison Rate 4.16%
Offset Account No
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
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 Rate 4.19%
Comparison Rate 4.44%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
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 Rate 4.19%
Comparison Rate 4.59%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
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.

Compare your
interest rate today!

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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.


Looking to keep the Australian economy steady and moving in an upward trend, the Reserve Bank has left the official cash rate on hold for yet another month. However, lender rate rises have begun, with lenders making a move to independently raise rates to negate their rising costs.


eChoice RBA Commentary for September 2018.

The Australian cash rate remains unchanged at 1.5% as:

• Underlying inflation is below targets at 2.0%;

• The Australian dollar drops to .72c US;

• Household consumption increased by 0.3%;

• Unemployment fell to 5.4%; and

• Capital city dwelling prices continue to adjust.

Here’s the deal: Given this move by lenders, economists predict that the RBA won’t make changes to the official cash rate anytime soon. Plus, these financial commentators suggest that if lenders continue to make independent rises, then the RBA may be forced to drop rates to stimulate the economy and consumer spending.

So, what’s this independent move mean for Australian homeowners?

Australian Home Loans & Lender Rate Rises

With economists warning that out-of-cycle rate rises are going to be a common occurrence, mortgage holders must prepare for financial changes in the future. Those who have variable rates and have stretched their borrowing capacity to its maximum potential should consider their options. Otherwise, they may be facing higher mortgage repayments.

For instance, smaller Australian lenders were the first to make independent rate rises back in June 2018. These lenders shifted their variable rates on principal and interest owner-occupier loans up by 10 basis points. At the same time, interest only owner-occupier loans and interest-only investor loans also rose up by 15 basis points. Then in the closing months of September, one of the big four banks announced that it too would independently raise its variable rates by .14 basis points.

What’s the bottom line? Well, for an Australian family with a $300,000 home loan, this lender move will add an extra $35 to their interest repayment monthly. Now, while this doesn’t sound like a lot, over a year this is $420. Plus, many Australians have far larger mortgages than $300,000.

But, it gets worse: This move by banks is expected to put Australian households under greater financial stress, especially when the debt-to-income ratio nationally sits at 200%. Australian borrowers will also find it harder to obtain a loan with it estimated that four in 10 home loan applications, including those refinancing, are rejected due to stricter lending conditions.

Now, you might be wondering: Why are lender rate rises occurring out-of-cycle?

Compare your interest rate today.

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The Cause of  Australian Lender Rate Rises

According to economists, Australian lenders are finding it difficult to maintain their current interest rates due to rising bank bill swap rates. Now for those who don’t know, bank bill swap rates are the short-term interest rate that benchmarks Australian dollar securities pricing. The RBA suggests that around 20% of bank funding is short-term derived and that the banks can no longer absorb these rising short-term costs as they have down in the past.

But here’s the kicker: Residential loans typically account for over 50% of a lenders total loan portfolio.  Thus, the sheer size of the portfolio means that the rising costs are affecting their profit margins.

How Australian Home Owners Can Combat Lender Rate Rises

Rather than preparing for battle, many economists suggest that borrowers seek to combat rate rise now by looking at their options. Why? Well, interest rates are still at record lows, and borrowers who consider fixing can even lock-in rates for under 5%.

This is crazy: Mortgage comparison sites indicate that the average 3-year fixed loan is just above 4%, while the average variable rate is closer to 5%. Many lenders have also adjusted their fixed rates, with reductions to make themselves more competitive in the market.

But, most borrowers with variable rates, also have a ’set and forget’ mindset when it comes to their home loan. Unfortunately, this can lead to higher mortgage stress later, especially as home values continue to adjust nationally.

How Is Australian Housing Performing?

CoreLogic_RP-Data_Logo

The Australian housing market, according to recent CoreLogic RP Data, is currently estimated to be worth $7.6 trillion, with the number of dwellings sitting around 10 million. The value of outstanding home loan debt hovers at $1.77 trillion, with household wealth estimated to be at 52.2%.

Nationally, dwelling values have fallen 2.2%, since peaking in September of 2017. Weaker housing conditions are attributed to tighter lending restrictions, especially in investment terms, and reduced market competition.

Dwelling Values August 31, 2018
All Dwellings
City or Suburb Month Qtr. Year Total Return Median Values
Sydney -0.3% -1.2% -5.6% -2.7% $855,287
Melbourne -0.6% -2.0% -1.7% 1.2% $703,183
Brisbane -0.2% 0.1% 0.9% 5.0% $493,922
Adelaide 0.3% 0.5% 1.0% 5.2% $438,466
Perth -0.6% -1.9% -2.1% 1.8% $454,007
Hobart -0.1% 0.1% 10.7% 16.2% $437,254
Darwin 0.1% -0.7% -4.0% 1.5% $439,718
Canberra 0.5% 0.4% 2.3% 6.9% $593,886
Combined Capitals -0.4% -1.2% -2.9% 0.3% $646,020
Combined Regional -0.2% -0.6% 1.6% 6.6% $368,336
National -0.3% -1.1% -2.0% 1.5% $552,141

Source: CoreLogic RPData

Want to know the best part? As a borrower, you can consider your options, rather than waiting for rate hikes. So, if you have a home loan, then now is the time to start looking at its affordability. You can do this by using a mortgage calculator to work out your repayments if your rate rises by 0.5%, by 1%, and even by 2%. If making repayments at these higher rates are going to be a struggle, then seek out an alternative that will make your home loan more affordable.

Are you looking to beat a rate rise by securing a more competitive home loan? If you said YES, then it’s time to discuss your options with an eChoice mortgage broker. Our brokers have access to 100’s of products across a panel of multiple lenders, so we can help you find a competitive mortgage.

What is my mortgage repayment?

$1,514
/month

SHOW DISCLAIMER

It seriously pays to compare the market when it comes to home loans. If you’re paying anything over 4%, then it’s definitely time to look at your options. Regardless of whether you’re an owner-occupier or an investor, there are home loans out there that will start with a 3, not a 4. These loans will also offer you all the bells and whistles that you get elsewhere; you just have to know what you want when you do your research.

Which Variable Rate Home Loan Represents the Best Value For You?

Just remember that cheap doesn’t always mean the best, you’ve also got to consider your personal and financial circumstances, as well as needs. Here’s the deal: if you don’t use a redraw facility, then don’t add this on as an extra home loan feature. Instead, look at home loans that suit your purpose. This could save you more long-term.

What’s the bottom line? Well, features typically cost you more in interest. So, if you are looking to save more by paying less, then go for a no-frills home loan that gives you a rock-bottom rate enabling you to pay more off your loan faster. This way you will decrease your loan principal faster and be a homeowner before you know it.

Finding the Right Variable Rate Home Loan For You

Take your time and write down all the factors that you’d like in your home loan. If you want a cheapest variable home loan rate that starts with a 3, then jot this down. If you want a rate that includes an offset account, then write this down. Once you’ve made a list, then start researching the market. Review as many home loans as you can and jot down any loans that stand out as being good value. Then gather information about these products so that you can compare these to each other later.

Now: if you’re confused and don’t know how to compare the market, then talk to a mortgage broker. A broker can help you make sense of loan products, and they can help you decide what represents value. But here’s the kicker: a broker’s knowledge comes for free. Why? Well, they receive a lender’s commission when they sign you up a loan product.

 

Here’s how you find the right deal for you

Step 1: Select your property objective below.

Step 2: Complete a few more questions so we can generate your borrowing power and lowest interest rate.

Step 3: Receive your free home loan report comparing 25+ lenders.

Are you looking to purchase a property or refinance?

So, what are some of the most affordable home loans out there now? We’ve done our research and uncovered four of the most competitive home loans on the market.

Some of the Cheapest Variable Rate Home Loans We’ve Found For Under 4%

Variable rate home loans come with the greatest range of features, and they also give you more flexibility when it comes to making repayments. As a result, these types of loans are some of the most popular on the market. Let’s look at some of the cheapest variable rate home loans on offer now.

All loans below use the following criteria:

  • Rates – as of 15th March 2018
  • Loan amount – $400,000
  • Property value – $500,000
  • Loan term – 30-years
  • Repayment type – principal and interest
  • Loan purpose – owner occupied
  • Repayment frequency – monthly
  • Interest rate type – variable
  • Based on – full documentation and exclude construction and line of credit loans.

Back to Basics – Suncorp Bank

With a lending range of between $150,000 to $5,000,000, the Back to Basics loan is a variable rate home loan with excellent flexibility. With zero fees and a loan-to-value ratio of 90%, this home loan is ideal for borrowers looking to get into the market sooner with a smaller deposit. However, this loan does not have an offset feature for those looking to reduce their interest even further. This loan includes the following features:

Suncorp
Features
Interest Rate 3.68%
Comparison Rate 3.69%
Offset Account No
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 90%
Annual Fee $0
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,836

 

Complete Variable Home Loan – Bankwest

Bankwest has a variable home loan on offer with a low rate. Including an offset and redraw, this loan has a minimum lending rate of $200,000 and a maximum of up to $2,000,000. With an LVR of 80%, borrowers will need a 20% deposit as security, otherwise they may incur Lender’s Mortgage Insurance (LMI). The features of this loan include:

Bankwest
Features
Interest Rate 3.70%
Comparison Rate 4.13%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $395
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,841

 

Flexible Home Loan – ME Bank

With a super competitive interest rate, the Flexible Home Loan by ME has an LVR of 80%, and an annual fee of $395.00. With a minimum loan amount of $400,000 up to a maximum of $2,500,000, this home loan suits those looking to buy varying styles of homes or even larger properties. Perfect for borrowers who are looking to borrow less by having a larger deposit, this home loan includes an offset account and redraw facility. So, you don’t reduce your cash flow, leaving you with more to spend on your new home. This super flexible loan includes the following features:

ME Bank
Features
Interest Rate 3.70%
Comparison Rate 4.11%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $395
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,841

 

Optima Offset – Homeloans.com.au

The Optima Offset home loan offered by Homeloans.com.au has a lending range of 20,000 to $1,000,000 making it ideal for borrowers who have smaller budgets. With all the bells and whistles – offset and redraw – included, this loan also has reduced fees making it even more attractive. As such, this products’ features include:

Homeloans
Features
Interest Rate 3.78%
Comparison Rate 3.81%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $198
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,859

 

Do you want a home loan for under 4%? If you said yes, then contact eChoice. Our brokers have access to 100’s of home loan products, so we’ll find you a competitive mortgage product to suit your individual needs.

Compare your interest rate today.

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Things you should know:

This information does not constitute as financial advice. Terms and conditions, fees and charges and normal lending criteria apply. Information & interest rate is current as at 15th March 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.

When it comes to getting a home loan, you want to find the best deal. But, this does not mean just focusing on the lowest rate. You also need to consider what home loan features you want, the type of interest, and your circumstances. So, does a mortgage broker or bank offer you the better deal? Let’s separate the fables from reality by asking mortgage experts what they really think, so you can decide for yourself.

Mortgage Broker or Bank? What the Bank Can Offer

Most Australians like the safety of a bank because they’ve been around for years and they have greater financial backing than some smaller lenders. But, this doesn’t mean they’ll offer you the best deal. What’s the bottom line? Often banks take brand loyalty for granted and they’ll charge more for their service due to demand.

So, what did the mortgage experts have to say? Well, the hottest banking questions asked to include:

  • Do banks reward loyalty? Often a bank will look at your history. So, if you’ve been banking with them for years and your credit history is outstanding, then this may persuade them to give you a better deal. They also look favourably on existing customers with a strong employment and savings past, and those who have other loans with them that they manage well. Want to know the best part? Often, they’ll let you bundle loans together, which will give you a better rate on all loans you have with them.
  • Do banks offer many home loan products? While a bank has several home loan options these are their own In addition, they also must adhere to their lending policies, which may prevent them from offering all their products to you.
  • Isn’t going to my bank easier? Many Australians go directly to their bank for a home loan because they already have an account with them. This strategy means it’s far easier because you don’t need to supply the bank with a financial or savings history. Here’s the deal: according to research, convenience is the main reason why Australians use a bank over a broker.
  • Can my banker offer me a personalised service? If you have a designated banker, then, yes, they can provide you with a personalised service, to some degree. Now: some bank customers will even have a designated branch or business banker. Others, though, have a loan officer that’s available at the time of their enquiry.
  • Will I deal with the same person over the lifetime of my loan? Sadly, no. Bank staff typically move around – good performers receive promotions, and staff cuts and branch closures lead to redundancy. So, the person who you deal with today may not be the person you deal with tomorrow.

Are you looking to purchase a property or refinance?

Mortgage Broker or Bank? The Mortgage Broker Defined

Mortgage brokers, on the other hand, are usually an unknown quantity and must earn your trust. But, they’re able to compare hundreds of loan products to find the right one for you. Plus, they’ll negotiate with a bank on your behalf, so they may be able to shave more off the interest rate your bank initially offered you.

Some of the most frequently asked broker questions according to mortgage experts are:

  • Do mortgage brokers work for banks? A broker doesn’t technically work for a bank. They are either employed by or own independent businesses. However, a lender, including banks, do pay a broker a commission when they sign you up for a home loan.
  • Do mortgage brokers charge a fee? In most cases, a mortgage broker’s service is free of charge. Although, some brokers will charge a fee for smaller loans under, say, $200,000. In addition, you may have to pay a fee if you repay your loan in under 2-years. Known as a ‘clawback fee’, a bank usually charges a broker this fee, which they may pass on to their customer.
  • What does a mortgage broker do for you? Brokers provide a personalised service from the start to the finish of your home loan. They help collect all your needed evidence and present the best application possible, they also take care of your application, as well as settlement. Want to know the best part? They negotiate the deal and liaise with credit officers, valuers, solicitors and even builders to simplify the buying process.
  • What do you need to give a mortgage broker? You’ll need to provide a broker with the same information that you give a bank – identification documents, financial history, employment details, an asset profile and a list of liabilities. They’ll also want to know how many dependents you have, how much you’re looking to borrow, and the size of your deposit. Plus, they’ll ask to check your credit history to see if you pay your bills on time.
  • Do mortgage brokers get better deals? A mortgage broker has a panel of lenders. These are typically banks, including the Big Four, as well as credit unions, building societies and other reputable financial institutions. Therefore, they can compare far more loan products than a bank can, and they can provide you with comparison information, so you make an informed decision.
  • How does a mortgage broker earn your trust? A good mortgage broker will make a time to meet you, and will then discuss your needs and financial history. At this time, you can ask them questions about their qualifications and level of experience. If you feel comfortable with them, then you may want to take the meeting further and begin discussing your home loan options.

However, regardless of whether you use a mortgage broker or bank, conducting independent research is ‘a must’. By spending the time to research mortgages, before signing up, you’ll have a better understanding of the market and you’ll instantly recognise a good deal when you find it.

Do you want a home loan for under 4%? If you said yes, then contact eChoice. Our brokers have access to 100’s of home loan products. So, we’ll find the right mortgage for you.

There’s far more to locking in a fixed rate than the lowest interest. While low interest seems attractive at first, it’s essential you also consider your personal and financial circumstances, fees and loan flexibility. If you don’t, then you may find you’re paying far more than you were previously, even if rates rise.

Fixed Rate Home Loan Versus Variable

Before you roll the dice on the fixed rate roulette table, you need to consider what you gain by fixing your loan instead of staying variable. Let’s compare the two loan types.

Fixed Versus Variable Home Loan
Home Loan Factors Fixed Variable
Less Financial Stress YES NO
Rate Certainty YES NO
Budgeting Assurance YES NO
More Loan Features NO YES
Pay Off as Much as You Like NO YES
Sell When You Want Without Penalty NO YES

 

If you want less financial stress with rate certainty, budgeting assurance and you don’t plan to sell, then go fixed. However, if you want competitive and flexible features – offset and redraw – and to pay off your home faster or you’re looking to sell, then leave your home loan variable.

A fixed rate home loan gives you less flexibility, but greater budgeting assurance. On the other hand, a variable rate home loan gives you a lot of flexibility, but can increase your financial stress.

What's my borrowing power if I earn $ per year?

The Pros and Cons of Fixed Rate Loans

So, we’ve compared fixed and variable rate home loans. But, what are the benefits and disadvantages of a fixed rate mortgage?

The Benefits

  • Repayment sureness – Opting for a fixed rate removes financial stress because you know what your monthly repayment will be even if rates shift. This type of payment sureness means you don’t need to monitor rate decisions.
  • Greater security – A fixed rate home loan protects you against rate rise. This security eases financial burden, reduces stress, and makes life more enjoyable.
  • Loan term flexibility – Fixed rate home loans have varying loan terms of 1, 2,3 and 5-years, giving you greater flexibility.

The Disadvantages

  • Decreased flexibility – When you fix your mortgage, you restrict the amount you can pay off your home loan. While most lenders let you pay off extra, they limit this to a certain amount. If you go over this amount, you’ll pay an added fee.
    Also, most fixed rate home loans don’t give you access to features such as an offset account. If they do, then your interest rate is typically higher.
  • Break fees – If you want to break your fixed rate term before it ends, then this can be costly. Break costs are payable if you borrowed at a higher rate than the current market rate. Lenders charge a break fee because they need to recoup their borrowing costs.
  • Rate drop – If the Reserve Bank or your lender drop rates, then you are left paying a higher rate than needed. This scenario can be costly, especially if your term is long.

So, what are some of the top fixed rate options on the market?

Three of the Top Fixed Rate Loans on Our Panel – Under 4%

To enable you to find an affordable fixed rate home loan, we’ve found three of the top fixed-rate loans on our panel.

The three cheapest fixed loans use the following criteria:

  • Rates – as of 3rd November 2017
  • Loan amount – $400,000
  • Property value – $500,000
  • Loan term – 30-years
  • Repayment type – principal and interest
  • Loan purpose – owner occupied
  • Repayment frequency – monthly
  • Interest rate type – fixed
  • Based on – full documentation and exclude construction and line of credit loans.

Fixed Interest 1 Year – Suncorp Bank

Having a minimum loan amount of $150,000 and a maximum of $5,000,000, the 1-year fixed interest home loan offered by Suncorp suits owner-occupiers looking to lock-in a lower rate for longer. This option then gives home owners an opportunity to save more over an extended period. Unfortunately, this loan comes with no added features such as an offset or redraw facility. However, with a loan rate of just 3.69%, and a comparison of 4.26%, this loan is one of the cheapest on the market. Plus, home buyers only need a 10% deposit if they are interested in this loan. This loan includes:

Suncorp Bank
Features
Interest Rate 3.69%
Comparison Rate 4.26%
Offset Account No
Offset Cost $0
Redraw Facility No
Redraw Cost $0
LVR 90%
Annual Fee $375
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,838

 

Fixed 3 Year – Auswide Bank

With a longer fixed period, this home loan is ideal if you are seeking budgeting assurance for longer. Suited to those buying a smaller home or those wishing to borrow no more than $499,000, this loan has a minimum lending limit of $250,000. Looking to help home owners reduce their mortgage burden and increase their cash flow, this home loan has an LVR of 90%. Therefore, a smaller deposit is needed to secure the loan. Other loan features include:

Auswide Bank
Features
Interest Rate 3.70%
Comparison Rate 4.73%
Offset Account No
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 90%
Annual Fee $395
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,841

 

Fixed Option 2 Year – UniBank

Offered by UniBank, this loan has an LVR of 90% meaning you’ll only need a 10% deposit to secure the loan. Also, this loan has no monthly fee and a lower revert rate, after the fixed period ends. UniBank is a well-known lending institution established in 1994 who support students, university staff and graduates. As such, they offer affordable lending packages with flexibility such as an offset account. Other features this loan includes are as follows:

Unibank
Features
Interest Rate 3.84%
Comparison Rate 5.13%
Offset Account Yes
Offset Cost $0
Redraw Facility No
Redraw Cost $0
LVR 90%
Annual Fee $200
Monthly Fee $0
Application Fee $600
Monthly Repayment $1,872

 

Are you seeking to fix your home loan for under 4%? Then contact eChoice, our brokers have access to 100’s of home loan products. So, we’ll find you the right mortgage.

Things you should know:

This information does not constitute as financial advice. Terms and conditions, fees and charges and normal lending criteria apply. Information & interest rate is current as at 3rd November 2017 & 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.

Details of the home loans featured on this page were correct for 11th October 2017. Take a look at our latest variable rate loans here

With the official cash rate being the lowest it’s been in decades; home loans are at ‘hard to pass-by’ rates. As a home owner looking to refinance or buy a property, this means that you could secure a far lower interest rate than you could 10-years ago. But, how do you find the cheapest home loan rate on the market, when there are hundreds of options?

Finding the Right Home Loan For You

Choosing a home loan has become a difficult task, as there are now so many options and products available. Apart from being able to select from introductory, fixed, and variable rates, you can also choose interest or principal and interest loans. Then, there are a multitude of features – redraw facilities and offset accounts. So, how can you avoid becoming so confused that you get dizzy?

Here’s how you find the right deal for you

Step 1: Select your property objective below.

Step 2: Complete a few more questions so we can generate your borrowing power and lowest interest rate.

Step 3: Receive your free home loan report comparing 25+ lenders.

Are you looking to purchase a property or refinance?

How to Conduct a Home Loan Comparison

If you want to narrow down your home loan choice, then it’s vital that you consider your needs. In fact, write these down so that you don’t forget them. For those of you who are wondering, home loan needs typically include:

  • The amount you can afford to borrow – use a borrowing calculator to work out this figure.
  • Type of interest – fixed, variable or split.
  • Repayment type – principal and interest, interest only.
  • Loan features – redraw facility or offset account.
  • Interest rate – focus on the comparison rate as this includes any fees and charges over the term of the loan.
  • Loan purpose – investment, construction, first home buyer, second home buyer, a line of credit etc.

Once you’ve decided on these factors, then it’s time to look at your options. To narrow down your selection, use a home loan comparison calculator. This tool helps you to find a competitive interest rate. Plus, it lets you find loans that match your specific needs.

Here’s how you compare home loans

Step 1: Select your home loan objective below.

Step 2: Complete a few more questions so we can generate your borrowing power and lowest interest rate.

Step 3: Receive your free home loan report.

Our Cheapest Home Loans – Under 4%

To enable you to find the right home loan, we’ve found eight of the cheapest on the market. These loans show you what is on offer and how little you can pay with the current rates.

The eight cheapest loans use the following criteria:

  • Rates – as of 11th October 2017
  • Loan amount – $400,000
  • Property value – $500,000
  • Loan term – 30-years
  • Repayment type – principal and interest
  • Loan purpose – owner occupied
  • Repayment frequency – monthly
  • Interest rate type – variable
  • Based on – full documentation and exclude construction and line of credit loans.

Ezy Economizer – Mortgage Ezy

With a lending range of between $50,000 to $750,000, the Ezy Economizer is a flexible owner occupier home loan. Features included in this package are an offset account, and redraw facility for no additional cost. Plus, the loan’s interest rate is 3.59% with a comparison rate of 4.03%. If you’re interested in this loan, then you’ll need a 20% deposit. This loan includes the following features:

Mortagage Ezy
Features
Interest Rate 3.59%
Comparison Rate 4.03%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $395
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,816

 

Back to Basics – Suncorp Bank

With a super competitive interest and comparison rate, the Back to Basics home loan is ideal for those looking to save more. This home loan is ideal if you’re looking to buy in more affluent areas as its loan range is between $150,000 and $5,000,000. This loan also enables you to buy with only a 10% deposit. So, you don’t reduce your cash flow, and you have more to spend on your new home. Offered by the Suncorp Bank, this loan includes the following features:

Suncorp Bank
Features
Interest Rate 3.68%
Comparison Rate 3.69%
Offset Account No
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 90%
Annual Fee $0
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,836

 

Variable – Bank of Sydney

The Variable Bank of Sydney home loan has a minimum loan amount of $20,000 and lends up to $4,000,000. With a 17-year history, this lender aims to offer its customers true and personal relationship banking. Those considering this loan will need a 20% deposit to apply for this deal. As such, this mortgage includes all of those features that save you more – redraw and offset, as well as:

Bank of Sydney
Features
Interest Rate 3.63%
Comparison Rate 4.03%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $395
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,825

 

Standard Variable – Auswide Bank

Formerly known as Wide Bay Australia, Auswide has operated since 1966. The Standard Variable Auswide Bank loan has a range of between $150,000 and $3,500,000. With a higher LVR, you need only a 10% deposit to apply for this home loan. Therefore, you’ll have more left after buying your home to cover stamp duty and other costs. The features of this loan include:

Auswide Bank
Features
Interest Rate 3.69%
Comparison Rate 4.08%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 90%
Annual Fee $395
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,838

 

Horizon – Resimac

The Horizon home loan has a lending range of between $10,000 and $1,500,000. Offered by Resimac, a non-bank lender who has been in the lending industry for 30-years, this loan has a competitive interest rate and includes a redraw facility. The redraw facility comes at no added cost and enables you to withdraw any extra funds paid into the loan. Other features this loan are as follows:

Resimac
Features
Interest Rate 3.71%
Comparison Rate 4.11%
Offset Account No
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $345
Monthly Fee $0
Application Fee $599
Monthly Repayment $1,843

 

Flexible Home Loan – ME

Owned by an Australian super fund so that profits stay local, ME is the ‘bank built for you’. Also, the Flexible Home Loan offered by ME has a loan range of $400,000 and $2,500,000. With a low interest rate and redraw facility, this home loan saves you more and provides you with flexibility. This loan includes the following features:

Me Bank
Features
Interest Rate 3.74%
Comparison Rate 4.15%
Offset Account No
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $395
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,850

 

Offset Home Loan – Macquarie

Macquarie is a financial group that provides asset management and finance. The group have a 48-year record of accomplishment and supply many lending products for a diversity of purposes. As such, the Macquarie Offset Home Loan has a loan range of $20,000 and $2,000,000. Thus, this loan offers a competitive rate of 3.79% and includes an offset and redraw for no additional cost. Other features include the following:

Macquarie Bank
Features
Interest Rate 3.79%
Comparison Rate 4.19%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $398
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,861

 

Classic Variable – AMP

With a 5-star CANSTAR rating as an outstanding value superannuation provider AMP have been in business for 160-years. As such, this wealth management group recently moved into banking and now provides a mixture of products. The Classic Variable home loan has a lending range of between $250,000 and $2,000,000. Offering a redraw and offset account, this loan saves you more long-term. Plus, it includes the following features:

AMP Bank
Features
Interest Rate 3.96%
Comparison Rate 3.98%
Offset Account Yes
Offset Cost $0
Redraw Facility Yes
Redraw Cost $0
LVR 80%
Annual Fee $0
Monthly Fee $0
Application Fee $0
Monthly Repayment $1,901

 

Do you want to know more about the cheapest home loans under 4%? Then contact eChoice, we can help you find out which home loans suit your purposes. Our brokers have access to 100’s of home loan products and they can carry out comparisons. So, we’ll find you the right mortgage.

Compare your
interest rate today!

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Things you should know:

This information does not constitute as financial advice. Terms and conditions, fees and charges and normal lending criteria apply. Information & interest rate is current as at 11th October 2017 & 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.

Australian financial institutions include banks, credit unions and building societies, as well as non-bank lenders. All these financial groups offer home loans. But, they are very different to each other in other ways.

Banks

Australian banks, including the ‘Big Four’ – ANZ, CommBank, NAB and Westpac – are the major lenders in the mortgage market. In fact, according to data, the CommBank and Westpac hold some 50% of Australian home loans.

Most Australian banks are well-established. Plus, they offer a wide range of financial products such as credit cards, savings accounts and mortgages.

The advantages of using a bank are:

  • This type of financial institution offers a range of lending products to suit a variety of situations.
  • Added security, with banks adhering to the Consumer Credit Code and regulated by the Australian Prudential regulation Authority (APRA).

However, banks may not offer the most affordable options when it comes to home loans. Therefore, it pays to shop around and compare lenders. You may also find that you don’t receive a personalised customer service from a bank. So, if you’re seeking better service, then you may wish to look elsewhere.

Building Societies and Credit Unions

While building societies and credit unions are very different to banks, these fall under bank lenders. This classification applies to these institutions as they are Authorised Deposit-taking Institutions regulated by APRA. So, how are they different to banks?

These lending institutions are:

  • Share based rather than publicly-listed – Run to generate a profit for shareholders, credit unions and building societies are member-orientated. So, rather than passing out profits to shareholders, these financial institutions pass their profits on to members. These offers often include better interest rates and lower fees.
  • Member orientated – With a customer ownership structure, building societies and credit unions require membership before you can take out a loan. Some building societies and credit unions charge a fee for membership, while others don’t. So, be sure to ask about charges before signing-up.
  • More personalised – Offering a broad range of home loan products, building societies and credit unions have competitive rates. Plus, their service is more customer-centric with reduced fees.

Non-Bank Lenders

Non-banks lenders are those without a banking license. These lenders offer home loans, but don’t fall under the same classification as banks, credit unions and building societies. Other differences include:

  • Private ownership – Non-bank lenders have private ownership. Therefore, they offer competitive interest rates and fees in comparison to larger lenders.
  • Security – While APRA regulates banks, the Australian Investments Commission (ASIC) regulates non-bank lenders. Plus, they must also abide by the Consumer Credit Code. So, while these are different regulators to that of banks it is still safe to borrow from non-bank lenders.
  • Lending criteria – Due to ASIC regulating non-bank lenders, they have simpler lending criteria. Thus, it is easier to get a home loan with these lenders.
  • Tailored loans – With a different lending criterion comes a broader selection of home loan choices. These home loans can be personalised to meet specific requirements with niche-market loans.

Which is the Right Lender For Me?

To find the right home loan for you, compare various lending groups to each other. Look at bank, building society and credit union loans, as well as non-bank loans. Compare interest rates, features, fees and customer services. Then, decide which fits your needs the best. Just remember that cheapest is not always ideal. Also, make sure you look at your needs and circumstances.

Do you want to know more about  bank, building society, credit union and non-bank home loans? Then contact eChoice, we can help you find out if you’re eligible. Our brokers also have access to 100’s of home loan products. So, we’ll find the right mortgage for you.

Two of the major banks have already said their rates are going up for home loans. Commonwealth Bank of Australia has now done the same, with ANZ following close behind.

The bank has hiked investment loans by 26 basis points to 5.94 per cent for interest-only investment loans, and standard variable rates for interest-only owner-occupier home loans by 25 basis points to 5.47 per cent.

This is despite the Reserve Bank of Australia keeping the official cash rate at a historic low of 1.5%. The major banks, however, have been slowly creeping up their interest rates this year.

Interest Rate Hikes Target Investors

The banks have pointed to the increasing cost of funding for the interest rate hikes. There is also a consensus that putting the pressure on property investors will help to slow growth and control the market. The  Australian Prudential Regulation Authority has set new criteria for investor loans to keep growth below 10%. This means that investors will see steeper increases as banks move to meet regulatory criteria, while if you are an owner-occupier, your mortgage repayments won’t likely go up as much.

The increases are also designed to protect the banks’ profits, as rate hikes help to improve their margins on all variable loans. Another way to meet the APRA regulations would have been to implement stricter regulations for property investors, thus leading to capped growth. The banks so far have chosen increasing home loan rates over stricter investor borrowing requirements.

Should You Refinance Now?

This means that if you are currently a homeowner, you may want to consider refinancing now. If you are currently paying down a variable rate loan, your monthly mortgage repayments will go up if your loan is with one of these banks. Also, while other lenders aren’t likely to increase rates as quickly, even non-bank lenders may enact a hike as a response to the major banks.

Many borrowers are browsing for options as the major banks push their rates up to either secure a fixed rate home loan or to find a better deal with other lenders.

Finance experts Steve Mickenbecker notes that the big banks tend to follow each other. When one announces a change in mortgage interest rates, the other three are almost certain to make similar changes. ‘The trend is the banks cover for each other, with maybe a bit more pain being taken by the first-mover.’ According to Mickenbecker, Commonwealth, as well as ANZ, will likely make announcements any day now.