2012 Best 1-Year Fixed Loan for a bank
Another former credit union has reaped the rewards of rebranding as a bank, after Bank MECU won a tough battle to take gold in the 2012 Best 1-Year Fixed Loan for a bank.
With an interest rate of 5.99% (6.52% comparison rate), rolling over to a variable rate of 6.58% after the fixed period, the Fixed Home Loan 1-Year loan beats most competitors soundly for rates and is also rich in innovative features.
Bank MECU allows unlimited additional repayments, without penalty, which is increasingly rare in modern fixed products. There is no application or ongoing fees, but deferred establishment fees apply if the borrower needs to revert back to a variable rate before the agreed fixed term is up.
The Fixed Home Loan 1-Year loan is available at a 95% LVR (with LMI if over 80%) and can also be used for construction and to purchase vacant land.
Borrowers can split between fixed and variable rates if desired, with a minimum amount of $10,000 in each category. Bank MECU also offers a number of opportunities to pause repayments for different reasons. For example, a three month pause from full repayments is available if borrowers intend to spend money on energy and/or water saving devices like rain water tanks or solar energy systems. If you are thinking of starting a family in the near future, the bank also offers the family repayment pause, which allows a three month break from repayments while one income earner is on maternity leave.
Fees also apply for portability and combination loan services, so think hard about your options before fixing.
Interest rate of 5.99% (6.52% comparison) rolling over to 6.58%
LVR of 95% with LMI and 80% without LMI
Options to pause repayments
No penalty for additional repayments
No application or ongoing fees
The Silver medal in this category goes to AMP’s 1-Year Fixed Rate loan, which reverts to a Pro Pack Variable after the fixed period expires. A handy rate of 6.09% (6.43% comparison), rolling into a 6.47% rate once the year is up gives AMP a solid product, with other great features, such as the ability to pay $10,000 a year above the agreed sum.
AMP also waives application and ongoing fees, but has a minimum loan amount of $250,000 and a minimum loan term of 10 years, meaning borrowers are still locked in for some time once the fixed period ends.
Westpac’s Premier Advantage Package 1-Year Fixed Rate ($250,000 to $500,000) product has taken out the bronze medal, rating just behind AMP for the silver. The Westpac loan has an interest rate of 6.29% (6.9% comparison rate) for the fixed period, before rolling over to a variable rate of 6.76%. The product has a single annual fee of $395 and higher than usual LVRs of 85% without LMI and 97% with LMI.
Westpac also offers a generous $15,000 of additional repayments for the year and unlimited redraws. Borrowers should remember that their loan would have to be within the prescribed range of $250,000-$500,000.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan