So you are looking to make a change but are bombarded with home loan choices. Lets see if we can help you with a 2 year fixed rate home loan review.
We looked at most of the 2 year fixed rates around town for someone borrowing $350,000. We then based our choice on price, features and offers to determine the best one out of what we have available for owner occupiers.
Remember your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.
The best of the Big 4 (CBA, Westpac, NAB, ANZ)
The winner for us is the CBA 2 year fixed rate at 3.74% and while this is not widely advertised these guys are basically price beating their direct competitors fixed rate offers with the added bonus of offering more features than the others and if you're refinancing, a $1,250 cashback as well. It really is the features that make this fixed rate more attractive than the others because the rates across ANZ and NAB are pretty much the same with Westpac lagging a bit as they try to capture market share with their variable introductory rate offer. Not a bad choice considering the competition for fixed rates.
To be specific it is the only fixed rate that offers extra repayment within an annual limit and a partial offset facility. Now if you were to place these side by side on the standard comparison table you would probably find that NAB would appear to save you the most cash with its cheaper fees and a higher cashback offer but the inclusion of offset really makes it the one I would choose because I like the ability to reduce interest where I can but also have access to my hard earned cash if I need too. Now if your not likely going to have spare cash lying around to offset interest I'd go for NAB and take advantage of there current cash back or virgin velocity points offer. It's also nice to know that even low deposit customers can still qualify for these deals.
A couple of points to note:
- This rate requires discretionary approval by CBA and can therefore be changed at any time and without notice so it needs to be checked on an individual application basis.
- When your fixed rate expires make sure you look to change because the rates become very average.
The best of the Regionals (Bankwest, St George, Bank of Queensland, ME Bank, Suncorp, Macquarie, P&N, Teachers Mutual, ING)
The pick of the bunch has to be the St George 2 year fixed rate. Not only is the rate the low at 3.75% for the fixed period but the added features of redraw, partial offset and extra repayments make it an attractive loan product. Like its parent Westpac, St George also offers cashback for those refinancing albeit a little higher at $1,500. There is a $395 annual and a $100 application fee but it does mean you get a waived credit card and transaction account fee and some other things to boot. To be fair pretty much all banks are running with the annual fee strategy these days. Once again the rate after the fixed rate period is average so it will be worth getting it reviewed.
A special mention goes out to Suncorp, Bankwest and ME Bank who actually have good variable rates to revert too after the fixed rate period ends. These could be good options for those not contributing a 20% deposit when buying and who wont have the ability to opt for low cost refinancing when the honeymoon period is over. It's worth noting that the variable rate can change over time and become less competitive then you once thought.
The best of the Niche Lenders (The Rock, Essentials, AFM, Homeloans, Gateway, Heritage, Auswide)
For the most part the majority of you reading this probably aren't familiar with most of the niche lenders around the place but this doesn't mean their offering isn't good and they tend to help customers who don't conform to regular bank policy.
This is actually a tougher choice than the others largely because there is no real stand out from my point of view. Some offer cheap rates with limited features while others offer features with higher rates, however I think the 2 year fixed rate at 3.79% from Essentials by Advantedge just wins this one from its peers. This one will really come down to how you are going to pay down your home loan. For the faster people out there its probably not the right choice for you but for those just paying the minimum it can work. While it is limited in features and will only allow extra repayment it makes up for it with a sharp variable rate after the fixed period ends. If you need features I would be more inclined to go with the Homeloans LTD 3.94%, its rate is marginally higher but the ability to reduce interest through extra repayments and access funds through redraw makes our logical choice.
The overall verdict?
I'll leave it to you to choose the winner overall. The reality is that about 75-80% of you will choose a Big 4 bank while others will go for something else. Overall rates are seriously cheap so if you are making a switch you are probably going to be better off than you are now.
If you need help seeing if you qualify for these please don't hesitate to contact us.
Information relevant as at 30/06/2016.