Emma Partridge, Eric Johnston
A NEW wave of discount mortgages is promising to shave about $4000 from yearly interest payments on the average Sydney mortgage.
The National Australia Bank’s internet-based subsidiary Ubank will offer a standard variable rate mortgage that is more than a percentage point below NAB’s advertised standard variable rate and that of its three competitors.
It follows aggressive moves by the Commonwealth Bank, which offered a ”no-fee” mortgage with a rate about half a percentage point below the big banks’ standard variable rate in February.
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Under Ubank’s new variable rate mortgage of 6.59 per cent, a person paying the highest standard variable rate among the big banks on a mortgage of about $300,000 would save $318 in interest a month, or $3810 yearly.
A person paying off a $400,000 loan would have the interest bill cut by $5080 annually, or $423 a month, and repayments on a $500,000 loan would fall by $6350, or $529 a month.
A chef living in Haberfield, Ibrahim Kasif, 24, has a $330,000 mortgage on his two-bedroom investment unit in Stanmore.
His monthly mortgage repayments are $2010 with a 7.11 per cent variable interest rate with the Commonwealth Bank.
”Discounted internet products are absolutely something I would consider. The biggest challenge for me is the constant battle with rate changes,” Mr Kasif said.
”Saving close to $150 a month is appealing and would definitely make things easier for week-to week lifestyle.
”There are times when it feels like you are going blow for blow with paying interest and it can be a strain with constant rate speculation.”
A Choice spokeswoman, Ingrid Just, said online bank products could only benefit consumers as long as terms and conditions were easily accessible for people to understand what they were locking themselves into.
Ms Just said these products offered significant savings to consumers and increased competition, but said some people may benefit from having more face-to face interaction with their mortgage lenders.
”One thing [about online mortgages is] it doesn’t allow as such is the conversation backwards and forwards for questions people have, she said.
”These questions may not be clear or answerable on Frequently Asked Questions online, especially for new home owners.”
UBank’s discounted rate is only available for mortgages sold online and will be available until the end of next month.
