Fixed Rate Home Loan with Uncapped Repayments within Fixed Period

Lpapapanda on 15/06/2020 - 10:03

Anybody know of any Fixed Rate Home Loans out there which have a low rate, and uncapped additional repayments during the fixed rate period (Max. 3 years fixed)?

Every Fixed Rate Loan I have looked at so far has a cap on the amount of extra repayments that you are allowed to make without incurring break / other costs. Usually this is between $10 - $20k.

Or, next best thing would be a Loan that has a much higher repayments cap, e.g. 50K+ p.a.

The best one I have found so far as at today (15-06-2020) is a 3 year fixed rate with U-Bank; who are offering 2.29% with up to $20k additional repayments during the fixed period.

Anybody know of a better deal out there?

Financial

Comments

  • zonra on 15/06/2020 - 10:05
    +2

    You can split your loan into a fixed and a variable portion (with offset).
    That way you have the best of both worlds.

  • keejoonc on 15/06/2020 - 10:26
    +1

    If you know you would be repaying that much extra, why would you not just split your loan into fixed and variable?

  • knobbs on 15/06/2020 - 11:01
    +1

    An option my broker bought up with me before my recent refinance was OzWide, https://www.auswidebank.com.au/personal/home-loans/ . They offer fixed loans with a 100% offset, could be good for you op. Effectively be paying off/offsetting as much as you want over the fixed term. Plus you can still take the money back out easily if you need.

    • virhlpool on 15/06/2020 - 23:41

      Not many banks offer fixed interest loan with offset account facility. Any catch with the handful of banks that offer?

  • netjock on 15/06/2020 - 11:04

    Every Fixed Rate Loan I have looked at so far has a cap on the amount of extra repayments that you are allowed to make without incurring break / other costs. Usually this is between $10 - $20k.

    $10k - $20k per year. If you know that then maybe split loan option. You have to work out how much you are saving in fixed vs variable.

    If fixed is 2.29% variable is 3% and you can get 0.8% easy access savings then net you're paying 2.2% you might as well go fixed and put the money into savings account.

  • Base Finance on 15/06/2020 - 16:31

    Mortgage broker here. There are some banks with good rates that allow you to fully offset a fixed loan.
    Not the big 4, but there are a few.
    DM me if you want to discuss.

    • virhlpool on 15/06/2020 - 23:43

      Are their fixed rates generally higher than the big banks? Why are they able to offer it which other banks can't? Just curious. Thanks.

      • Base Finance on 16/06/2020 - 00:27

        Surprisingly it’s around the same.
        I’ve never understood how they can offer it. I suppose they just accept they could lose a little but it’s a way to get new customers in.

  • mortgagebroker on 15/06/2020 - 22:30
    +2

    Bank Australia
    Adelaide Bank
    Auswide
    TMB

    Offer Offset on a fixed rate :)

  • papapanda on 16/06/2020 - 12:23

    OK, this is all very helpful information. Thanks to all who responded.

    However, the more I dig beneath the surface of these loans, the more I realise how important it is to read the fine print … :/

    I checked out the Split Loan option and all the banks suggested, did all the maths and compared …

    What I am finding is that after the fixed period, a lot of banks (including U-Bank and most of the suggested banks) revert to a variable rate that is higher than their standard low variable rate.

    This applies to the fixed portion of a split loan also. So in the long run (I'm looking at approx. 10 year loan), Fixed and Split Loans (even with 100% offset) are actually about the same and in some cases worse, as the total interest ends up being higher than just going standard variable from the start.

    One way around this issue might be to, as soon as the Fixed term ends, re-fix the Loan for another fixed term at whatever is the low fixed rate of the day. Or perhaps another way may be to discharge the Fixed Loan at the end of the fixed term, and get a new standard Variable loan at the normal rate, but I'm not sure whether banks allow this, and what additional / hidden costs it might attract?

    • Sheeplovebeer on 16/06/2020 - 20:05

      Before your fixed expires you should negotiate the rate on variable.

    • haliloo on 16/06/2020 - 23:18

      Adelaide bank offers a fixed loan called SmartFix With 100% offset that at the end of the term allows you to covert to their standard variable loan (SmartFit) for free. I’m also after a home loan and happy to exchange ideas. Send me a private message if you happy to discuss.

    • haliloo on 16/06/2020 - 23:19

      Adelaide bank offers a fixed loan called SmartFix With 100% offset that at the end of the term allows you to covert to their standard variable loan (SmartFit) for free. I’m also after a home loan and happy to exchange ideas. Send me a private message if you happy to discuss.

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