July’s best fixed and variable home loans: Michelle Hutchison

As was widely anticipated, the Reserve Bank left the cash rate unchanged at 2% at this month’s meeting on July 7. But is that the lowest rates can go, or can we expect another cut on the cards?

Global instabilities may have just paved the way for another rate cut in the near future, according to Australia’s biggest Reserve Bank Survey. It’s also predicted that interest rates are to begin rising.l soon after a possible drop. What’s a potential home buyer to do? One option is consider splitting your home loan. 

Split loans allow you to lock in a portion of the loan at a fixed rate, meaning part of your repayments will not change during that period. This can be helpful against a turbulent cash rate; the property market may be uncertain, but there’s no reason for your mortgage to be.

Finder.com.au’s lowest variable rate home loans that allow split options:

• Homestar Finance Basic Refinance: 3.94%

This home loan has some parameters that make it more skewed towards those looking to refinance, namely needing to have a 30 percent deposit and limiting your loan amount to $500,000. If you happen to fit into these parameters (whether refinancing or not), this loan comes with no application fee and no worry about LMI – the beauty of a low LVR.

• loans.com.au Dream Essentials: 4.02%

With a loan amount ceiling of $750,000, you may not be buying a mansion with this product but you will be opening up a loan that is portable, allows splits as well as extra repayments and redraws. It’s also worth noting the $220 valuation and $300 settlement fees as considerable start-up costs when looking to budget your initial repayments.

• BOQ Discount: 4.04%

If you can swallow a $395 annual service fee and have a 20 percent deposit saved up, you’ll be able to access this offering from Bank of Queensland and have a low rate home loan that allows for a 100% offset account and allows redraws and additional repayments. This loan entails some handy features for those who have proven they can save a deposit, and will manage a sizeable annual expense into their budget.

Finder.com.au’s lowest 3 year fixed rate home loans that allow split options:

• Newcastle Permanent: 3.99%

• Homestar Finance: 4.11%

The second mention for this smaller lender, their 3 year fixed rate is competitively low and has no annual service fee.However, it does come with an application fee of $495 and a settlement fee of $535, which could be a turn off for some cash-strapped buyers. You also won’t be able to make extra repayments, so carefully mapping out the full cost of your home loan repayments is crucial. 

• UBank UHomeloan: 4.18%

You won’t be able to make additional repayments or redraw from this home loan, and a $395 application fee is a considerable initial cost. If you don’t mind these parameters and have a 20% deposit, this loan offers a competitively low rate and no ongoing service fees.

Michelle Hutchison is Finder.com.au's resident money expert. She can be contacted here.