This involves going into debt for several years. However, that isn’t necessarily a bad thing. If you do your homework and you choose the right lender and offer, you’ll still be able to live a comfortable life while in debt.
In this article, we’re going to be giving an overview of UBank home loans – an online-only lender.
About UBank
A lot of people are wary of online-only lenders and that’s often understandable. One of the main issues is that they’re volatile. Hence, they tend to go under more easily than regular banks. That being said, this isn’t at all the case with UBank, seeing as they’re backed by the National Australia Bank (NAB).
“What’s so great about that?” you might ask. Basically, any financial institution that’s backed by the NAB receives a Government Guarantee. This means that any money you’ve deposited into an account there is insured up to $250,000 per person.
While U-bank doesn’t have any physical branches, you can still get in touch with them via phone or Skype. In a way, that’s more convenient. You can still talk to representatives but without the hassle of long physical lines.
UBank focuses specifically on home loans and nothing else. However, they offer a variety of mortgage products. For instance, they’ve got products that closely mimic investment loans with short or long-term fixed home loan rates.
So far UBank has had 553,000 customers and managed $16.8 billion worth of funds. A good alternative to UBank is Sunshine loans.
Features of UBank’s Home Loans
Deposit Size
Deposit size refers to the percentage of the mortgage’s total value that you need to have procured as a deposit before you’re eligible to receive the rest. In UBank’s case, the deposit size is 20%, which is honestly quite high by market standards.
Split Rate
It’s always a difficult choice, deciding between a fixed interest rate and a variable rate. With the latter, you can take advantage of it if the market rates fall in the future. However, there’s always the possibility that the market might take a turn for the worse. With fixed mortgage rates, you’ll have more stability and you’ll know exactly how much to pay each month.
Fortunately, UBank offers split rate options. This means you can split your loan into portions and decide whether to go with fixed or variable interest for each.
Interest-only
UBank’s Fixed Home Loan offers an interest-only option. This involves only paying interest each month and having the lump sum deferred as a single payment at a later date. Interest-only loans are great if your finances are poor now but you expect them to be much better later. They’re suitable for investors as well, allowing them a bit of leeway until their investment starts to pay back.
Redraw Facility
Most lenders either offer offset accounts or redraw facilities. With offset accounts, the money you deposit helps to shrink your loan size by way of interest rate cuts. For instance, let’s say you took out a mortgage of $200,000 and you’ve got $15,000 in your offset account. In this case, your interest rate will be calculated for $185,000 instead of $200,000.
UBank offers a redraw facility on its variable rate loan, which is different from an offset account. Let’s say you make some extra money and you put that towards your repayment. A redraw allows you to pull that amount out of the account if you suddenly find yourself needing it.
UBank Home Loans – the Numbers
With a loan from UBank how much can I borrow?
Pretty much any loan product from UBank lets you borrow over $200,000. Of course, your credit score will determine the borrowing power you have.
What sort of interest rates can I expect?
UBank home loan rates start as low as 2.69%. Depending on the loan product, this can go up to around 3.69%. Comparison rates, however, can give you a more accurate idea of the true cost of each loan. This is because they factor in all the charges and fees as well. UBank’s comparison rates can range from 2.84% to 3.84%.
Is there an application fee?
UBank charges application fees for certain loans. For instance, the UBank UHomeLoan charges a fee of $395 to process each application.
Who is Eligible for a UBank Home Loan?
Eligibility criteria can vary between different loan products. However, the following basic requirements apply for each one:
- You need to be older than 18
- You should be an Australian resident
- You should have a stable income
In order to prove the above, you’ll have to submit the following documentation:
- Identification in the form of a driver’s license, passport…etc
- Proof of income – recent payslips should be fine
- Asset and liability documents – these show how much you have in terms of savings, investments, properties
- and how much your current outstanding debt is.