The Greater Bank Great Rate Loan includes fixed and variable options for owner-occupiers and investors looking for a relatively low interest rate product with limited fees.
Importantly, one of the first questions you will need to decide is whether a Great Rate Loan with a fixed or flexible interest rate is best for your circumstances.
The big plus of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. This can be an attractive option, particularly if you are the type of person who likes the security of knowing how much you need to repay each month.
A variable rate on the other hand fluctuates up and down over the course of your loan, as determined by the bank. Variable rates, including those offered on the Great Rate loan, generally allow greater flexibility in terms of paying off you loan, including unlimited extra repayments which will help you get ahead on your loan and save money in the long run.
For those that can’t decide, or just want a bet each way, there is the option to spilt your loan between a fixed rate and a variable rate.
There are a number of advantages with the Greater Bank Great Rate Loan that you should take into account when comparing it against loans from other lenders on the market.
Firstly, the Great Rate Home Loan lets you make additional payments, giving you the ability to pay off your loan sooner and potentially save you thousands of dollars in interest. Moreover, with the Great Rate Home Loan there are unlimited free redraws when you use internet banking so you can access any extra funds you have put in to your loan when you need them.
The Great Rate home loan does live up to it’s name in that it focuses on providing its customers with relatively low rates, however the rate will depend on which option you choose so make sure you understand what interest rate you will be charged. The Great Rate loan also spruiks that it has no upfront or ongoing fees which is often hard to find in the home loan market these days.
These two aspects of the loan can potentially save you money so it is worth calculating how much this loan will cost you over the entire term, and compare it with similar loans on the market to see how it stacks up.
The Great Rate Loan will let you borrow up to 95 percent of the property’s value, which means prospective home owners will only need a five per cent deposit on their loan. While this may seem like a win, prospective buyers should remember that borrowing with less than a 20 per cent deposit will mean you have to pay lenders mortgage insurance – which covers the bank, not you, in the case that you cannot meet the repayments.
Greater also has flexible repayment options on this loan which means you can choose to pay weekly, fortnightly or monthly, according to your pay cycle. People who choose to pay more regularly could also save on interest just by paying more frequently.
If you’re looking for a new lender, or haven’t got a loan yet, Greater Bank often run new customer deals, where they offer an extra low rate for people who don’t currently have their home loans with Greater Bank.
You can read more about the Great Rate Loan here.
While the features of the Great Rate Loan are appealing, there are a few things this loan doesn’t deliver. Firstly, the majority of options under this loan do not include a 100 per cent offset account, which could be a deal breaker for some customers.
The Great Rate Loan is also a full documentation loan, meaning that those who have difficulty proving they have a regular income, such as the self employed, might have to consider other options.
Another downside is that there is a discharge fee, often called a called ‘termination’ fee, charged when you pay out your mortgage in full. While this fee is relatively moderate, it is still an expense worth taking into consideration when assessing this loan.
Also, Greater Bank products are only available for NSW, ACT and QLD customers.
About Greater Bank
It’s possible you may not know as much about Greater Bank as you do the Big Four, however, Greater Bank is a competitive lender that has been around since 1945, operating in Queensland, NSW and ACT. A big difference from the major banks is that it is a customer-owned bank, rather than being publicly listed.
Advocates of customer-owned banks say this structure is a major strength because they can offer similar products to the big banks without the pressure to generate profits for shareholders.
That is due to the fact that unlike a publicly listed bank like NAB, CBA, Westpac and ANZ where profits are distributed to shareholders, customer-owned banks say they can plough more profits back into offering their members competitive rates, lower fees, responsible lending and superior service.
Another reason you may not be particularly familiar with Greater Bank compared to the majors is because in the first half of 2016 it changed its name from The Greater Building Society after the Australian Prudential Regulatory Authority (APRA) gave approval. There has been a steady trend of building societies and credit unions converting to mutual banks, after APRA relaxed the criteria required to include the word ‘bank’ in a company name.
One issue in taking out a loan with a smaller lender is that it does naturally engender the sense of security that comes with using one of the big four. However, on this point you should remember that banks like Greater are regulated by the same organisation that monitors the big banks. You should still do your research on any lender before signing up, but the APRA oversight is great for your peace of mind.
Greater Bank must also comply with the customer owned banking code of practice, meaning it has made a pledge to responsible and fair banking.
While Greater Bank does have a limited number of branches, it does have a variety of other ways to bank with them, including a comprehensive online banking platform, a banking app for your phone or tablet, telephone banking and an SMS service where they will send you reminders to help you stay on top of your account.
If you are looking for below average interest rates and low fees, without too many additional frills that other banking products might include, then Greater’s Great Rate Home Loan is worth looking into.
While it might not have a 100 per cent offset account, it does boast a other features to get you onside such as unlimited additional repayments, which is critical if you want to get ahead on your home loan, and a redraw facility.
Potential customers will need to be comfortable dealing with a bank with limited branch access however there are plenty of ways to talk to Greater including the standard internet and phone options.
Note: This review provides general information about the above home loan. Any views expressed are the author’s own. It is not intended to be a recommendation of a particular product. To the extent that this commentary may constitute general advice, this advice is of a general nature and does not take into account your individual objectives, financial circumstances or needs. We recommend that before you make any financial decision you seek professional advice from a suitably qualified adviser and read the PDS. Read more about our important disclosures here.