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The Cost of NAB's Discounted Variable Rate Home Loan
National Bank
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Fixed rate, introductory rate, line of credit loans all of these options can get confusing. If you want to go back to basics with your home loan, a home loan like the NAB Base Variable Rate Home Loan could present a simple solution, but do your homework first to check that it's right for you.
The NAB Base Variable Rate Home Loan offers a discount of 0.5% per annum on NAB's standard variable rate, and a 0.7% per annum discount for mortgages over $250,000. Remember that this discount is only relative to NAB's standard rate, so even with the discount taken into account, you may be able to find a lower rate through a non-bank lender.
A discounted variable rate would appeal to many home buyers, but be sure to find out more about the features and flexibility offered by a loan before making a loan commitment based on the interest rate alone.
The NAB Base Variable Rate Home Loan allows home buyers to borrow up to 80% of the Loan to Valuation Rate (LVR), or 95% if they cover the additional cost of Lenders Mortgage Insurance. This means you could borrow more and therefore need to save less for a deposit, but the added cost of Lenders Mortgage Insurance could increase the total amount owed by a considerable amount.
The features offered by NAB include the ability to make extra repayments, a redraw facility, the ability to split your loan and the flexibility to make monthly, fortnightly or weekly payments. These features could be useful, but they come at a cost.
For example the NAB Base Variable Rate Home Loan allows borrowers to access a redraw facility, but there is a minimum redraw amount of $2000 at a cost of $50 per transaction.
Extra repayments can be made, but if the loan is paid in full within the first four years of the loan term, an Early Exit Fee of $900 applies. The NAB application fee of $600 is among the highest of those offered by other banks and non-bank lenders.
Fees and charges add to the overall cost of your home loan and can restrict your ability to get out of debt sooner, so be sure to read the fine print and understand the costs of any loan in the long term.
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