Offset rising property prices by making the most of your home loan: Michelle Hutchison

GUEST OBSERVATION

Australia’s ‘property inferno’ is well and truly alight this month.

With property prices set to continue rising through 2015 and more cash rate cuts on the horizon, potential home buyers need to seriously consider whether they’ll make the most of favourable opportunities to dive into the market.

If property prices are on the up and up, and variable rates set to follow the cash rate to new lows, it makes sense that securing a property sooner rather than later will help to reduce your long-term costs. By choosing the lowest rate available to you, you may be able to offset some of the costs associated with higher property values, before they rise any further.

Finder.com.au’s lowest variable rate home loans

1. loans.com.au Dream Home Loan Essentials: 4.23%
   
   This is the lowest variable rate on Finder.com.au and a heavy contender in terms of additional features. While you’ll have access to extra payment and redraw facilities, portability and splitting options, you won’t have access to an offset account or physical branches – loans.com.au is a solely online lender. This paired with a $375 annual fee could sway some potential buyers.
    
2. UBank UHomeloan: 4.29%
   
   This loan is only available to those who have secured a 20% deposit on their loan, however this dedication is rewarded in the form of $0 application or ongoing admin fees, which is a welcome change in the home loan market. Provided you’re an Australian resident with a Pay As You Go (PAYG) income from an employer, this loan can provide you with some cushy features such as free, unlimited redraws and various splitting options.
    
3. State Custodians Standard Variable: 4.34%
   
   If you can pay the $299 Annual Service Fee, $275 Valuation fee and $300 discharge fee, you’ll have access to a flexible loan with 100% offset options, as well as extra repayments, redraw facilities and split loan options.

Finder.com.au’s lowest three-year fixed home loans

1. Newcastle Permanent: 3.99%
   
   This is the lowest 3-year fixed rate on Finder.com.au and home to a limited-time cashback offer of $1000 on applications made before May 1, settled before June 26 and over $150,000. Just be aware that there are no redraw services for this loan, so make sure the repayments are a financial commitment you can dedicate to – as you won’t be able to use the money elsewhere once it’s deposited.
    
2. UBank UHomeloan: 4.18%
   
   This loan is designed for the sure-footed as it does not allow extra-repayments or redraws on the fixed term of your loan – you’ll have to look elsewhere should you need extra money in the first three years. Aside from a $395 application fee, there is no annual service fee and you’ll be allowed to change up the repayment frequencies, which is a key consideration should you need to make strategic repayments around other lifestyle factors such as transitioning between jobs.
   
   
3. loans.com.au Dream Home Loan: 4.29%
   
   This loan allows five free splits, which could be a highly valuable option for many first home buyers, especially being in the middle of cash rate movements. With additional repayment options and no application or ongoing fees, it may provide a smooth transition for those apprehensive to enter the market – provided you’re adequately braced for an initial $220 valuation fee and $300 settlement fee.

Michelle Hutchison is spokesperson for comparison website finder.com.au.