UBank Home Loans from 2.84% (Redraw Only, No Offset, No Application or Ongoing Fees)

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Post rate cut, Ubank is passing full rate cut 0.25% to existing as well as new customers. so new rates are starting from 2.84%. Do not that there is no offset account but redraw only. no application or ongoing fees and lending criteria is bit softer than Athena and TicToc.

I was rejected by both Athena and Tictoc but Ubank did not make fuss about my credit score (which is 700+ without any blemish).

https://www.ubank.com.au/newsfeed/articles/2019/09/ubank-rba...

Rates effective from 29th Oct.

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Comments

  • +8 votes

    Love ubank

  •  

    Hi OP, just curious though if you have $40,000, what is the best solution to make more money? I checked term deposit's rates, it is very similar to Bank's current interest rates…

    • +7 votes

      It depends on what you plan to do with that money in the near future. If it is to deposit the home within 12 months then it is better to put it in high interest saving account. If it is 5 years, probably put it in the index fund ETF, it can yield better but it takes time and has some risks, too.

      • +5 votes

        I'd also add that you should still keep 6 months living expenses in a HISA when buying an index fund ETF.
        You don't want to have to sell your equities for a loss to make ends meet while looking for work during an economic downturn.

      •  

        Is it better over putting it in offset / loan account to save on Home loan?

        •  

          Offset for flexibility and investment purposes

        •  

          I'm also interested in the answer to this question, given the gains to be made from an ETF (and the tax to be paid on it). Is putting it into an offset a better long term strategy?

          Completely clueless when it comes to investing and am currently putting all earnings straight into the offset.

    • -2 votes

      I have a financial adviser in Nigeria who offers some outstanding returns. Don't be put off by the poor spelling or weird grammar. If you transfer your money to myhis Bitcoin wallet, I can guarantee you won't have to worry about the work involved with managing such a large amount.

    •  

      If you're looking to save for your first home the first home super savers scheme is a good way to get a tax-efficient boost to your savings.

      https://www.ato.gov.au/Individuals/Super/Withdrawing-and-usi...

      There is a sweet spot in terms of how much you earn in order to make the scheme work best for you. Also, it's dependent on how well your super fund is performing.

      •  

        Actually you get a deemed interest from it (not actual) - so even if your super fund is doing terribly you can take out the same amount (assuming you have enough in the account to do so).

        •  

          You're 100% right. I kind of meant if you're really good at investing in other ways then there could be an opportunity cost as this money is really difficult to access and you can only access it when you retire should you not buy a home.

        • +1 vote

          Any other hidden tricks? If I want to buy as a first home buyer, initially live, and turn into investment? Will using this affect interest rate or credits? Would you use it?

          •  

            @etrxnox: Depends on your timing and flexibility for now —> buy —> Investment, but if you have the flexibility its extra money that you will only have a chance to get for your first home, and double if you're buying with a partner.

            The flexibility that you lose is:
            1. You have to declare weeks before you get a place that you're looking to buy (up to a month, have to get the money out before you can sign a contract). If you buy before then you risk getting money stuck in your super
            2. After you buy you need to live there for 6 months (I believe, check yourself on the Gov website)
            3. You have to spend the money on a house within 2 years once you've taken it out. This means if you put the money in then lose your job you'll be waiting a long time to take it out, and if you take it out and lose your job you may be locking it back in.
            4. Takes a bit of time to get the most benefit out of it. You can put in $15k per FY up to
            5. Benefit depends on how much you earn per year, if you earn above or below the average range (50-80k) you'll get less benefit. Too far above and below and you wont get much/any.

            TLDR: I did use it. I would recommend if it suits your circumstances. Work out what you could borrow today and do the maths.

    •  

      P2P lending with ratesetter?

  • +3 votes

    Shame there is no offset

    •  

      what is the benefit of offset vs free redraw? thanks

      • +3 votes

        offset gives the ability to manage money better for tax reasons/IPs

      • +22 votes

        No difference if owner occupied and planning to live forever in your current home. Interest paid will be the same using either redraw or offset. Different if you intend to live elsewhere and use current home as an investment property in the future.

        In the latter scenario, if you use a redraw account, any excess repayments will be counted as paying down your mortgage, which will reduce your potential tax deductibility once it becomes an investment property. If you use an offset account, the excess funds in your offset will reduce your current interest payments without affecting future tax deductibility as an investment property. Since the offset account is considered separate, it does not count as paying down your mortgage.

        Suggest you see a financial adviser or tax accountant if you need more details.

        •  

          thank you!

        • +8 votes

          The fundamental difference between Offset and Redraw is that Offset = your money, Redraw = Bank's money. During the financial crisis, banks made the money in redraw inaccessible. And of course few people already mentioned about tax implication.

        • +1 vote

          Big difference between Offset and Redraw.

          Redraw facility:
          - The money can be called in at any time
          - Each time you redraw, you are essentially taking out a new loan (tax implications on investment loans, future investment of ppor etc..)

          Offset:
          - The money is seperate to your loan, you can take it out anytime and has no tax implications

          If none of that means anything to you, then Redraw is fine for your purpose :)

      • +9 votes

        Redraw -
        - can't get your money back out immediately, so you need to be careful about what you put in
        - if you move out later and get tenants in, making it an investment, you can only claim tax deductions on the loan for the balance you paid the loan down to, even after you pull all of your available redraw
        Offset -
        - immediate access to money
        - because it's immediate access, you're going to put more money in there because there's probably no sense putting your spare cash anywhere else
        - doesn't impact tax deductions if turned into an investment

        •  

          thank you!

        • +1 vote

          Redraw -
          - You can claim deductions on the interest of the redraw loan if the withdrawn cash is invested in an asset that produces a return, e.g. dividends.

          • +1 vote

            @Shwayne: Be very careful with this approach. If you are audited this can get very messy if you have bought and sold shares and need to show the money flow.

        • +1 vote

          can't get your money back out immediately, so you need to be careful about what you put in

          depends on which bank / product

          i can pay bills from my homeloan acct , or immediate transfer to linked savings/transaction acct

      •  

        Functionally not a great deal, the biggest differences are around what you want to use the excess funds for (e.g. if you intend to swap between an owner occupied vs an investment property down the track).

        Pulling this from the earlier Athena thread, see the table lower down the page for functional differences: https://www.athena.com.au/learn/redraw

        Also note this paragraph at the bottom of the page: "Investor taxation treatment - If you have an investment loan and intend on taking money out of your redraw for non-investment purposes you may not be able to claim the interest on that amount as tax deductible. And get some tax advice if you’re thinking of using your redraw from an investment loan for non-investment purposes."

      • +4 votes

        Also, if the bank gets into trouble financially (hopefully unlikely), the Commonwealth Government Financial Claims Scheme guarantees the offset account up to $250k, so you'll still be able to get funds to live on etc. There's no similar liquidity guarantee for redraws.

  •  

    My application with them was approved just yesterday. They collect quite detailed information about your living expenses. As long as you can provide them the requested documents promptly, your application should get processed within 3 - 5 weeks. The only catch I found in researching this home loan was that redraws can take 3 - 5 days (according to their website). Therefore, you would be well-advised to get familiar with the ins and outs of their USaver Ultra account.

    https://whirlpool.net.au/wiki/ubank

    •  

      Took about 5 months for us to refinance with UBank this year between initial application and settlement… “approved” super quick though.
      They just seemed to want another document and then another thing and another… happy with everything and the rate now though.

      •  

        Is it? My loan approved last week and then got docs from their solicitor and now waiting for settlement.

    •  

      Around how long did loan assessment take for you? I.e. between submitting docs and credit assessment approval.

      Thanks!

    •  

      Hi Obenihk, what kind of documents did they want and how far back did they need to go?

      • +1 vote

        From memory: spreadsheet of all my monthly expenses, 6 months of statements from my current home loan account, last 2 payslips, evidence of home ownership (I submitted a copy of my council rates payment advice), identity check through AusPost.

    • +1 vote

      That 3-5 days probably covers the "redraw on a Friday", and it'll hit your account the Monday or Tuesday after. Normally if I redraw early in the week, I have the money in my account in 2 days.

      •  

        Thanks for that info. Yes the consultant who handled my application did tell me that in practice it would be quicker than 3-5 days.

    • +1 vote

      I put extra money into the loan and redraw it all the time. Its usually there by the next day or maybe 2

  • +2 votes

    We were with ubank last year (until we sold before the downturn) but the one thing I found frustrating was the redraw process. If you transferred funds via redraw after 6pm AEST then you'd have to wait an additional business day before your funds hit your linked transaction account (eg 6:05pm Friday meant you'd be waiting until Tuesday morning before you could access those funds). With the rate on offer, no doubt most people could live with this but I just thought I'd put it out there.

    •  

      How was redraw when you transfer funds during week say on Monday 6.00pm. did it available in few hours in your other accounts?

      • +1 vote

        It was the same as any inter-bank transfer. If you did it before 6pm, it'd hit your account before midnight otherwise you are waiting an extra day. If you use your credit card for most transactions and pay it off at the end of the month, this method is doable otherwise it is incredibly frustrating when you realise at 7pm that night that you have a bill due or something and you forgot to do a redraw before 6pm!

    • +3 votes

      man thats crap in the same account, bankwest is instant no matter what time of day it is…and there is no reason for it not to be!

  • +1 vote

    UBank or antenna? Any suggestion?

  • +7 votes

    No offset, no deal

    •  

      Any provider you can recommend that has offset?

      •  

        We went with Homestar for a refinance on their Variable Owner Occupied Home Loan product, 2.82% with offset. Wasn't as smooth an application process as we've had with UBank and it's a struggle to get them to clearly set out all the fees/charges before you apply.

      •  

        Tictoc. They are about to lower their rate from 2.99%. They have lowered the rate 3 times since being with them (a few months) and always passed the rate onto me. Backed by Adelaide/Bendigo banks. You can even go in and manage funds from those banks. The latter is just a big hidden plus for me where I only have Bendigo Bank in my town.

        •  

          Are you currently getting 2.99% from TicToc? I'm with them and on 3.24%, been with them for about 18 months.

          •  

            @onetwothree: Yep. I started at 3.4 or something at application. They reduced it automatically over the next month or two, twice. Then I was stuck on 3.09 I think when they were advertising 2.99. I contacted them and politely asked to be placed on the lower rate and within a couple of days they did so.

            So just contact them.

    • +1 vote

      I don't think redraw is that bad. You will have more benefit having offset if property is IP.

      •  

        Really only a benefit if it is or ever will be! an investment. Not something you can retrospectively change, so if you want to move without selling in 10 years time you might suffer financially and have to sell instead.

    •  

      Offset has a price, for most people it seems to be like 0.5-1.0% of a million dollars per year (that's $5,000 - $10,000).

  • +1 vote

    any news on ING new rates?

    • +2 votes

      As someone who is already with ING, I recommend against signing up with them unless you're happy for your rate to creep up over time. We started on 3.74% a few years ago, and between rate cuts they have dropped our rate but also increased it so we're currently above 3.74%.
      Would have gone with uBank instead but our circumstances have changed so we don't qualify for a uBank home loan.

      • +1 vote

        Like you I too started with them when it was 3.74 or so, but now I'm at 3.48 (not counting yesterday's 25bp drop). You could call them and say you want to switch over. I got a measly 0.09% off from this, applied to all future rates.

        •  

          Well that 0.9 is better than nothing! Thank you, will try this. Much appreciated.

        •  

          I recommend giving your bank/broker a call to see what they can do for you. Being a long term customer, the bank would allow interest rate concessions.

          I had been on 3.89% on PI OO loan with offset prior to the last rate cut, and broker was able to negotiate with the bank 3.33% (after 25bps rate cut being passed on, I had received a 0.31% rate cut). It's still not competitive as the other banks, but the most important thing is if you dont ask you wont receive.

      •  

        Thanks for your feed back, any other feed back, anyone?

        I am just about to sign the loan papers they have send to me at 3.18% that is before the rate cut yesterday dont know if they will pass the new rate cute in my case.

  •  

    Newbie about bank lending here.

    I just sign the contract with CBA for a property to live in. But their rate is not good, 3.35%, and they not apply the rate cut immediately. Can I refinance after settlement a few months, or I must wait at least one or two year?

    My lending is 30% deposit, variable with redraw feature, CBA provide me Smart Assess account with card and Loan account, so I can use these to transfer in/out (redraw) funds in Loan account. This feature I did not see when reading Ubank loan application. Will Ubank provide something like this?

    •  

      worth looking at your lending docs. Are you on fixed or variable rates? Whats exit fees….

      •  

        Mine is variable rate, just ask my friend who was with CBA but he is now with Ubank, he just changed lender after 8 months of settlement. I think it is possible. My exit fee is the same like him, $350

        • +1 vote

          We're in the same situation, just signed with CBA as their application process is much less stringent which we needed as we moved to a new area and both have new jobs. We'll likely refinance within the first 12 months.

    • +1 vote

      Ubank has ultra transaction and its online savings account interest rate is far better than cba.

    •  

      You need to check the fees and see if it's worth it. If your mortgage is low, then the exit fees are more than likely going to cut up the benefits of leaving.

      3.35% isn't a bad rate. It's about average for a bank. Keep in mind places like Athena are lenders not banks. They are no frills, hence why they don't offer offset accounts and only free withdrawals.

      You need to do the numbers..

  •  

    Will it affect my credit report? Or there is a pre approval before proceeding or deciding to go full application?

  •  

    If you apply now and get accepted before the 29th, will I still get the reduced rate once in affect?

    •  

      Its worth reading link i put in OP. It'll answer your question.

    •  

      We’re reducing all our variable home loan interest rates by 0.25% p.a. from 29 October 2019.

      All new and existing UBank customers with variable rate home loans, including anyone in the process of applying for or settling a new variable rate UHomeLoan, will get the new reduced rate.

      This is the third RBA rate cut in 2019 that we’re passing on to our home loan customers in full. That’s a reduction of 0.75% p.a. for our customers with variable rate home loans who have been with UBank since rates began falling in June. It’s awesome to be able to help save our customers money with a UBank home loan.

  •  

    Is there much of a delay transferring money into the ubank mortgage? Any restrictions?

    I'm thinking of simply having money deposited into our normal accounts and then just transferring money to ubank mortgage with every pay. Unless it takes forever for money to be counted against the mortgage account or there are limits on transfers, it will save us a ton of money. I will just keep a generous buffer in the normal account so that we only have to redraw if there's any major unexpected costs. Who cares if buffer is not offset when the rate is so much lower.

    I'm sick of rates just going up and cuts not getting applied. We changed banks only a year or two ago and we are already at a very unfavorable rate. Even if they give us the cut in rate (not applied yet!), we'd still save like $3000 per year by moving to ubank. Banks are the worst.

    •  

      It seems to take a few days to show up but is backdated to the transaction date in my experience. I have a regular transfer set up from my bank account into the BSB and account number provided by UBank. You could even provide these account details to your payroll and have them deposit all of part of your salary into the mortgage

      You can also pay by BPay or have UBank make regular deductions from your bank account.

  • +3 votes

    Great rate, but redraw only is a dealbreaker for me. In addition to the above comments about redraw, you also need to realise that access to your redraw is never guaranteed. The bank can prevent you from accessing (redrawing) any overpayments. Sure it's unlikely, but they could require a reassessment of your finances. Or more likely in a falling market, they may re-value your property and determine that your new LVR (the value of your property compared to the size of the loan) doesn't support your re-draw.

    Might not be an issue, but you never know.

    • +2 votes

      I used to have this problem too 1-2 years ago. However, I would just call them up and say that I was thinking of switching and they always matched their best available rate.

      The last three rate cuts this year have automatically been passed on in full to all variable customers. You may have to wait a month but everyone gets it

    • +2 votes

      They have ALWAYS passed the rate cuts to me. Over the past year this has been automatic, but before that I would just send a "private message" (via their online website portal) and they would always reduce the rate to match, no questions asked.

  •  

    UBank has a low attractive rate and passes on full 25 point cuts. What's not to like? NAB and CBA have passed on about half the cut. If you're still using the legacy banks and complaining about interest rates you only have yourself to blame. I switched years ago and am very satisfied.

  • +1 vote

    UBank are fantastic if you are happy with a nonbranch lender I recommend UBank.

  • +1 vote

    It's hard to check the offset calculation, especially if you link a transaction account to your loan account. With a redraw, it seems easier to check if the interest charged is right. Just a bit of conspiracy theory, or may be because I lost my truth with the banks?

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