Pros:
- Competitive interest rates / loyalty discount
- Online or over the phone application process
- Settlement as quick as 10 business days
- No application, exit or ongoing fees
- Plenty of features including free redraw, portability and split loan option.
Cons:
- No offset account
- Strict eligibility criteria
Overview
The UHomeLoan is a competitively priced home loan offering one of the lowest basic variable rates in the market. It excels by having fewer fees and is fully featured with the exception of no offset account. Sadly, the home loan is not available to all borrowers as non-refinancers (i.e. people looking to obtain a completely new loan), self-employed individuals, and those with existing mortgage LVRs of more than 80% will not be accepted for approval.
Key Product Details Explained
UBank has recently launched its first home loan product named the UHomeLoan. UBank has been successful in the saving and deposit space over the last few years and has now decided to turn its focus on the mortgage market.
Interest Rates
The UHomeLoan is a competitive home loan with a variable interest rate of 6.99%pa and a comparison rate of 6.92%pa. The product also offers 1, 3 and 5 year fixed rates for borrowers looking to lock in their rate. The UHomeLoan is highly competitive product with a basic variable rate lower than any of the big four bank published basic rate offerings.
| UBank UHomeLoan |
Advertised Rate pa |
Comparison Rate pa |
| Basic Variable |
6.79% |
6.72% |
| 1 Year Fixed |
6.94% |
6.82% |
| 3 Year Fixed |
7.09% |
6.81% |
| 5 Year Fixed |
7.54% |
7.05% |
Rates correct as of 9 Aug 2011
UBank offers borrowers a loyalty discount of 0.10%pa off the variable interest rate to customers who hold a variable rate UHomeLoan for 3 years. This discount is applied for the life of the loan. The loyalty discount serves as an incentive for customers to stick with their home loan for the long term. Interest rate loyalty discounts are somewhat scarce in the market with only a handful of providers offering them however they could become more common in the future.
Application Process
UBank has no branches so all customer interactions are completed over the internet or telephone with the bank offering 24 hour, 7 days a week customer support phone line. Having no face-to-face contact with a lender may sound unusual but a growing amount of financial services business is now being conducted in this manner. Borrowers can apply for the loan online or have a customer support team member talk them through the process over the phone. Applications can be saved midway through the process and completed at a later date also.
The initial application process is quick and easy to complete as the bank asks for the standard home loan borrower details. Once completed UBank states that customers will know within 30 minutes if they are eligible to move forward with the application process. UBank claim that loan settlement can take as little as 10 business days from the application date instead of 4-6 weeks as is the case with some providers.
Fees and Features
The UHomeLoan charges no application, exit, ongoing or transaction fees on the loan while offering plenty of product features. Not charging any of these fees helps the UHomeLoan to remain very competitive in the market.
The only fees on the loan affect those looking to fix the loan. The fees include a fixed rate lock fee charged for the bank locking in the fixed rate between formal approval and settlement on the loan which acts as a safeguard against any interest rate changes during the period, and a break cost if customers wish to pay the loan out before the end of the fixed term or switch from fixed to variable rate.
There are plenty of product features to boast loudly about including a free redraw facility, the ability to split the loan partly variable and fixed, ability to make additional repayments without penalty, option of interest only or principal and interest, flexible repayment options and portability.
The only feature missing from the equation is the option of an offset account linked to the loan. Some may suggest that with the abilities to make additional repayments and the free redraw that this is not a big loss as borrowers can still put extra money onto their loan and then transfer that money back when required however it would be nice to have the offset option even for a small fee.
Eligibility Criteria
UBank want to deal with only “safe” borrowers who are looking to refinance their existing loan which can only have a maximum LVR of 80% of the property value. First home buyers looking to obtain a home loan for the first time are not eligible regardless of the size of their deposit while UBank also categorises self-employed individuals as not eligible for loan approval.
Visit UBank's website for more information or to enquire.
