Australia’s sweetest home loan deal just got sweeter

Australia’s lowest variable rate now available to first home buyers

 

Finally, some good news for first home buyers; Australia’s lowest variable home loan rate is now available to you, and more affordable than ever.

Reduce Home Loans is extending first home buyers a lifeline in the form of competitive home loan rates with a cheaper LVR. Our Super Saver Variable Loan is opening up applications to all owner-occupier purchases, thanks to its popularity with our refinancing customers.

The Super Saver Variable loan, which boasts a record-breaking interest rate of 1.77% (1.86% comparison rate), is one of the most competitive interest rate offers in the market.

Not only that, but we’re increasing its loan-to-value ratio limit from 60% to 80%. This means it’s even easier for first home buyers and refinancers to take advantage of the competitive Super Saver Variable loan.

What the LVR change means for borrowers

The loan-to-value ratio (LVR) of a home loan refers to the difference between the value of the property and the amount you borrow through a home loan, reflected as a percentage. This is typically used to help lenders evaluate the level of risk associated with a borrower’s application.

Borrowers who do not have an LVR of at least 80% also must pay lender’s mortgage insurance (LMI), an insurance paid to the lender that can climb as high as tens of thousands of dollars, depending on the value of the property. This LVR criteria means that Super Saver Variable Loan applicants will not need to pay this costly insurance.

Previously, Super Saver Variable Loan applicants were required to have an LVR of 60%, i.e. a deposit of 40%. This is not too difficult for refinancers to achieve, but a tall ask for first time buyers – particularly those looking to buy in capital cities.

This new change makes the home loan potentially more affordable for eligible first time borrowers.

 

A lifeline for first home buyers

Reduce Home Loan’s Super Saver Variable Loan has been popular with refinancers since it broke records by offering the lowest refinancing variable home loan rate (paying principal and interest).

And now it’s time for first home buyers across Australia to consider taking advantage of this competitive home loan offering.

Property prices across Australia may be feeling out of reach for many first home buyers. The latest CoreLogic figures for November show that prices have skyrocketed 21.58% higher in value year-on-year. In Sydney alone, house values are up 30.4% annually, and the first time buyer favourite, the unit, has experienced a 13.6% rise in this same period.

And first time buyers who do manage to get a foot on the property ladder are still repaying mortgages sometimes over six times their income. This is a trend that prompted the Australian Prudential Regulation Authority to increase banks ‘stress test’ buffer rate for borrower serviceability from customers needing to afford repayments at 2.5% to 3%.

Reduce Home Loans has previously noted that some of the best options for first home buyers right now is to avoid borrowing more than they can afford, and to seek out a home loan that offers a competitive rate and features. These steps are some of the most effective in reducing the impact of large mortgages on household budgets.

The interest rate a lender may charge is one of the most significant factors that affects the ongoing and overall cost of a loan. By opening applications to all owner-occupier purchases, Reduce Home Loans is allowing eligible borrowers to gain access to a competitive variable rate home loan. And by increasing the loan’s LVR requirements from 60% to 80%, borrowers will now only need to save a 20% deposit to meet this eligibility criteria.

 

Note: It’s crucial that borrowers assess their financial situation and budget to determine whether a home loan is appropriate before making any serious financial decisions. Consider reading the product disclosure statement for more information on the Super Saver Variable Loan to determine whether it is appropriate for you.

 

How much could you save with a Reduce Home Loan?

Reduce Home Loans’ Super Save Variable Loan offers an interest rate of 1.77%. This is 1.25 percentage points lower than the average variable owner-occupier home loan rate across all institutions (3.02%), according to the latest Reserve Bank of Australia data.

So, how much might a borrower save by considering this home loan option?

LVR savings

By increasing the LVR requirement of this home loan, owner-occupier purchasers will need to save up a 20% deposit as opposed to a 40% deposit, and refinancers will only need to build up 20% equity in the property.

 

Capital city Median Unit Value 40% Deposit

(For 60% LVR)

20% Deposit

(For 80% LVR)

Sydney $837,262 $334,905 $167,452
Melbourne $621,898 $248,759 $124,380
Brisbane $437,086 $174,834 $87,417
Adelaide $372,520 $149,008 $74,504
Perth $402,525 $161,010 $80,505
Hobart $555,552 $222,221 $111,110
Darwin $356,024 $142,410 $71,205
Canberra $547,484 $218,994 $109,497

Source: CoreLogic.com.au Home Value Index, October 2021.

 

Repayment savings

A hypothetical first home buyer taking out a 30-year, $500,000 home loan with an average variable, owner-occupier interest rate of 3.02% (as per RBA data) would pay $2,113 in monthly repayments.

The same borrower on the Super Saver Variable Loan would be charged at a rate of 1.77%, paying monthly repayments of $1,791. This is a saving of $322 a month or $3,864 in one year.

 

Interest rate Monthly Repayments Repayments over 12 months
Scenario A 3.02% $2,113 $25,356
Scenario B 1.77% $1,791 $21,492
Difference 1.25% $322 $3,864

 

For more information about the Super Saver Variable Loan, speak with one of our home loan experts at Reduce Home Loans on 1300 733 823 today.

 

Any statement/s are general in nature and do not take into account your financial personal situation, objectives or needs. You should consider whether any statement/s is suitable for you and your personal circumstances. Before making any financial decision, consider your circumstances and the product disclosure statement.

 

(29)    For the Rate Cutter Variable where the borrower pays $1170 upfront fees then a corresponding loyalty discount of 0.10% p.a. off the Rate Cutter Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(27)    For the Investor Rate Slasher Cash Back Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Investor Rate Slasher Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(26)    For the Low Rider Cash Back Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Low Rider Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(25)    For the Economizer Cash Back Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Economizer Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(24)    For the Super Saver Cash Back Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.10% p.a. off the Super Saver Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(23)    For the Super Saver Variable where the borrower pays an upfront fee of $1170 then a corresponding loyalty discount of 0.15% p.a. off the Super Saver Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(22)    For the Economizer Variable where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.11% p.a. off the Economizer Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(21)    For the Investor Cash Back Hero Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Cash Back Hero Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(18)    For the Home Owners Dream 1 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(20)    For the Cash Back Hero Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Cash Back Hero Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(14)   For the Investor Rate Slasher where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.09% p.a. off the Investor Rate Slasher rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(12)   For the Investor Rate Lovers Interest Only where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.07% p.a. off the Investor Rate Lovers Interest Only rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(11)   For the Wealth Maximizer 3 year fixed Principal & Interest where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Wealth Maximizer reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(10)    For the Wealth Maximizer 2 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Wealth Maximizer reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(9)    For the Home Owners Dream 3 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(8)    For the Home Owners Dream 2 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(7)    For the Investor Rate Slasher where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.09% p.a. off the Investor Rate Slasher rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(6)    For the Investor Rate Buster Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Investor Rate Buster Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(5)    For the Rate Buster Variable where the borrower pays an upfront fee of $150 then a corresponding loyalty discount of 0.05% p.a. off the Rate Buster Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(4)For the Rate Slasher Variable where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.08% p.a. off the Rate Slasher Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(3) For the Investor Rate Lovers Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Investor Rate Lovers Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(2)For the Rate Lovers Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Rate Lovers Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(1) For the Low Rider Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Low Rider Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(28) For the Rate Crusher 1 Year Fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.05% p.a. off the Rate Crusher reverted variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(19) For the 1 Year Fixed Wealth Maximizer where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the 1 Year Fixed Wealth Maximizer reverted variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.