The Member Package Flexible Home Loan, offered by ME Bank, may be suited to borrowers who want a low interest rate and plenty of choice when it comes to features.
Flexible is the key element of this home loan: for an annual fee, this package includes a discounted variable rate or low fixed interest rate; a wide choice of loans up to a maximum term of 30 years; waived fees and features such as an offset account, redraw facility and free additional repayments.
It’s worth noting that only Australian and New Zealand citizens or permanent residents are eligible for this loan. The minimum borrowing amount is $40,000 for all loans under the package; for properties in Tasmania, the minimum amount is $20,000.
Read more about this loan here.
A review of the interest rates offered
Under this package from ME Bank, both owner-occupiers and investors can choose a variable rate home loan, a fixed rate home loan for up to a 7-year term, or a split between the two.
The interest rate discount for variable home loans varies, depending on how big your deposit is. For owner occupiers, a 20 per cent deposit attracts a competitive variable interest rate after you apply the package discount, while a deposit of less than 10 per cent comes with a less competitive rate – although still moderately low compared to other lenders on the market. Variable home loans for investments works on a similar sliding scale, although the discounted rates for investment loans are slightly higher than owner-occupier rates.
Fixed rate home loans under the ME Bank Member Package don’t come with a discount although the rates are still fairly competitive, particularly for fixed periods of 1, 2 or 3 years. ME bank also offers 1 year ‘interest in advance’ home loans – an option for investors who want to take advantage of a low fixed rate and potential tax benefits.
Review of fees
The ME Bank Member Package Flexible home loan charges an annual fee that is higher than the average amount charged by lenders, but on par with packaged fees charged by major banks. In return, borrowers receive no ongoing account keeping fees, solicitor fee, valuation fee, split loan fee or top up fee. For those keen to get ahead in their repayments, extra repayments are also free on a variable rate loan, and there is no early exit fee should you finish paying your loan early.
Fixed rate loans incur a few more charges on top of the annual fee. Early repayments on a fixed rate loan are only allowed up to $30,000, with a possible prepayment fee charged if the loan is repaid before the end of the term and ME incurs a loss from the termination. A rate lock request fee also applies if you want to protect yourself against future interest rate increases and lock in a good fixed rate on the day of application. If a fixed rate loan is what you’re after, you may want to look around at other lenders which can offer a similar low rate, but with fewer fees.
Review of the features
The ME Bank Member Package Flexible home loan offers a great deal of choice when it comes to features. Alongside free repayments and the ability to make lump sum repayments, the package is portable and comes with an offset account on any variable loan – a valuable resource to have if you want to use your savings to potentially reduce your overall interest. A construction facility is also available for those who plan to build, or renovate, and make payments in stages while keeping interest repayments as low as possible. And for those who may need to draw on their repayments in the future – perhaps to fund a renovation, holiday or car – a redraw facility is available for variable rate loans, with a minimum withdrawal amount of $500.
This package also offers a certain degree of flexibility when it comes to scheduling repayments. Borrowers can choose to make weekly, fortnightly or monthly repayments in order to suit their budget and pay schedule. Repayment holidays are also available if you need some respite from making repayments, subject to approval by ME. Alternatively, the Member Package Flexible home loan also offers interest only payments for up to five years. This can be a useful option to have up your sleeve in case your circumstances change – for example, you drop an income or start a family and need to take the pressure off making full repayments for a period of time.
Banking with ME Bank
Owned by a collection of industry super funds, ME Bank has been operational since 1994 and offers a wide range of financial products alongside home loans, including personal loans, credit cards, business term deposits and car loans. It has an extensive national ATM network that includes Westpac, St George, Bank of Melbourne and BankSA. ME ‘mobile banking managers’ are also available to visit you at a time and place that’s convenient for an obligation-free discussion about your home loan.
Technologically adept borrowers may be pleased to hear most transactions with ME are conducted online. Repayments are mostly made through direct debit – although there is a salary credit or direct credit payment option – and borrowers can transfer money and make repayments through ME’s online banking system. The lender also has a mobile app with touch ID that allows you to check your balance, transfer money, browse your transaction history and if needed, find your closest ATM.
Who would this home loan suit?
The ME Bank Member Package Flexible Home Loan may be a good option if you have a decent amount of savings and want to pay down your loan as fast as possible on a low variable rate. If you’re in this situation, a large deposit will ensure you get the most competitive interest rate this package offers, while features such as an offset account and extra repayments may work to your advantage – provided you are diligent at saving and keen to put your money to work.
Investors may also find this package suited to their needs, in particular the one year fixed interest in advance home loan which may increase the tax effectiveness of an investment. Borrowers whose circumstances are likely to change down the track may also appreciate the Member Package Flexible home loan; if, for example, you have a baby, drop an income or move houses in the future, features such as a redraw facility, repayment holiday and portability can be useful.
On the other hand, if you’re after a simple, straightforward home loan that offers the sharpest interest rate on the market without too many features, this loan may not be suitable for you. There may be more competitive interest rates out there on the home loan market – especially if you are looking to borrow with a less than 10 per cent deposit – so it’s worth looking around to see what options are available to you.
It’s also worth noting that there is no low doc option with a Member Package Flexible home loan, making this product unsuitable if you are self-employed or a small business owner and don’t have access to the financial statements usually needed to apply for a loan.
Before signing on with ME Bank for the Member Package Flexible home loan, make sure you know exactly what you want from your home loan, especially when it comes to which features you need. If you’re unsure, finding a qualified and independent financial planner may help put you in the right direction.
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.