TicToc cuts home loan interest rates to new low ahead of RBA meeting

TicToc cuts home loan interest rates to new low ahead of RBA meeting

Online lender TicToc has cut interest rates on its home loans a fortnight before a possibly historic rate cut, positioning its product alongside some of the most competitive in the market.

The company, renowned for its quick turnaround times and backed by both Bendigo and Adelaide Bank, slashed interest rates today on its variable home loans.

Take out the revised principal-plus-interest home loan and the advertised rate will be 2.19 per cent. Minimal fees help keep the comparison rate low too at 2.20 per cent.

“This home loan is perfect for anyone looking to buy or refinance their home,” Laura Osti said, head of marketing at TicToc.

“The best part is, our digital application and assessment process means a faster and simpler experience.”

What other important info should I know?

Home buyers will need a deposit of 10 per cent to be eligible. Keep in mind a deposit below 20 per cent will likely incur lenders mortgage insurance, a bank tax that generally costs thousands.

Most variable home loans come with an offset account, a transaction account where the repayments made reduce the balance owing, but can also be withdrawn if needed. Tic:Toc is offering an offset account as an option on its variable rate loan.

The online bank boasts a speedy turnaround time on applications due to its “auto assessment” technology.

“The minimum days between one of our customers being approved and settled is just three days,” a company spokeswoman said. They did not provide info on maximum.

Switch from a big four bank and it could lead to savings

People who hold a mortgage with one of the big four banks could potentially save thousands in interest costs by refinancing onto the revised product, a RateCity analysis found.

A Commonwealth Bank customer, for instance, on a comparable loan offering the current 3.13 per cent interest who refinances their $400,000 mortgage with TicToc’s aforementioned variable loan could save $3729 over the first year and $17,878 over five years.

Over 25 years, they could save $57,402.

How does it rank compared to other home loans?

A RateCity analysis found the offer is among the top ranking products on the market, at the time of publication, taking out the top spot in some cases.

Out of 413 variable home loans, TicToc’s offering ranks sixth -- ahead of 407 competing products.

Compare it to similar products that take a deposit of 10 per cent, and TicToc’s product ranks first, besting 321 products.

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Learn more about home loans

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

How much are repayments on a $250K mortgage?

The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

How will Real Time Ratings help me find a new home loan?

The home loan market is complex. With almost 4,000 different loans on offer, it’s becoming increasingly difficult to work out which loans work for you.

That’s where Real Time RatingsTM can help. Our system automatically filters out loans that don’t fit your requirements and ranks the remaining loans based on your individual loan requirements and preferences.

Best of all, the ratings are calculated in real time so you know you’re getting the most current information.

Savings over

Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

Mortgage Calculator, Repayment Type

Will you pay off the amount you borrowed + interest or just the interest for a period?

Mortgage Calculator, Deposit

The proportion you have already saved to go towards your home. 

How common are low-deposit home loans?

Low-deposit home loans aren’t as common as they once were, because they’re regarded as relatively risky and the banking regulator (APRA) is trying to reduce risk from the mortgage market.

However, if you do your research, you’ll find there is still a fairly wide selection of banks, credit unions and non-bank lenders that offers low-deposit home loans.

Mortgage Calculator, Loan Purpose

This is what you will use the loan for – i.e. investment. 

What is the average annual percentage rate?

Also known as the comparison rate, or sometimes the ‘true rate’ of a loan, the average annual percentage rate (AAPR) is used to indicate the overall cost of a loan after considering all the fees, charges and other factors, such as introductory offers and honeymoon rates.

The AAPR is calculated based on a standardised loan amount and loan term, and doesn’t include any extra non-standard charges.

What factors does Real Time Ratings consider?

Real Time RatingsTM uses a range of information to provide personalised results:

  • Your loan amount
  • Your borrowing status (whether you are an owner-occupier or an investor)
  • Your loan-to-value ratio (LVR)
  • Your personal preferences (such as whether you want an offset account or to be able to make extra repayments)
  • Product information (such as a loan’s interest rate, fees and LVR requirements)
  • Market changes (such as when new loans come on to the market)

Mortgage Calculator, Loan Term

How long you wish to take to pay off your loan. 

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

What is a specialist lender?

Specialist lenders, also known as non-conforming lenders, are lenders that offer mortgages to ‘non-vanilla’ borrowers who struggle to get finance at mainstream banks.

That includes people with bad credit, as well as borrowers who are self-employed, in casual employment or are new to Australia.

Specialist lenders take a much more flexible approach to assessing mortgage applications than mainstream banks.