UBank makes it easier to manage your money

UBank makes it easier to manage your money

Would you like to be better at money? In that case, UBank may have come to your rescue.

UBank said its customers can now get “an in-depth understanding of their finances and spending, in a simple click, through UBank’s in-app budget tool”.

This new feature comes after UBank became the first bank to form a partnership with Basiq, an Australian fintech whose investors include NAB Ventures and Westpac’s Reinventure. Basiq’s open banking platform helps customers understand their spending habits, and also suggests changes to their behaviour.

“Customers will be able to see their total spend and every transaction across 40 different categories as well as detailed spending by merchant,” according to UBank.

“Empowered by these insights, users can then easily create a budget by entering their expenses, and the app will provide them with a single, real-time number representing their daily spend allowance.”

The future is fintech

UBank isn’t the only lender to expand through fintech. Two years ago, Bankwest unveiled a range of wearable technology that let users pay for their groceries with rings. Last year Westpac created a line of designer wearables, including pins, bands and chains. They can be attached to objects like shirts or gym towels so users can pay with their clothing.

It’s not just wearables that are showing off how far financial technology can go. There are a range of educational apps that help to teach children about money by letting them check their balances, transaction history and set savings goals.

A range of fully licensed neobanks (digital banks controlled through apps) have also emerged in Australia.

It’s understandable when you consider that Roy Morgan research into digital payment solutions found that Gen Z and millennials are more likely to pay using fintech, whether through Android Pay, Apple Pay, Google Pay or another app.

There is a clear emerging market and banks, like UBank, are smart to step into this space.

UBank transaction and savings accounts

UBank has one transaction account, called Ultra:

  • 0% standard interest rate
  • 1.06% bonus interest rate available
  • $0 monthly fee
  • $0 overseas ATM fee
  • $0 fee for online purchases with overseas merchants

UBank also offers three different savings account options:

Account

Eligibility

Interest rate

Monthly fee

USaver

Aged 18 and above

1.04%

$0

USaver + Ultra

Link USaver savings account to Ultra transaction account

2.10% (base rate of 1.04% + bonus 1.06% if you deposit at least $200 per month)

$0

USaver Reach

Aged 18 to 29

1.55%

$0

Do your research

As with all financial products, it’s important to compare savings accounts before you sign up.

The UBank USaver + Ultra savings account has a very high interest rate by market standards. Here are some other savings accounts with some of the highest interest rates in Australia: 

Institution

Account

Base rate

Max. rate

How to earn max. rate

86 400

Save

0.40%

2.25%

Deposit $1,000 per month

Up

Saver

0.50%

2.25%

5 debit card transactions per month

Bank of Queensland

Fast Track

0.35%

2.15%

Deposit $1,000 per month

ME Bank

Online Savings Account

0.35%

2.05%

4 tap-and-go transactions per month

RAMS

Saver Account

1.15%

2.00%

Deposit $200 per month, no withdrawals

MOVE Bank

Bonus Saver

0.80%

2.00%

Deposit $200 per month, no withdrawals

Australian Unity

Active Saver

0.50%

2.00%

Deposit $250 per month, no withdrawals

MyState

Bonus Saver

0.30%

2.00%

Deposit $20 per month, 5 debit card transactions

CUA

eSaver Reward

0.05%

2.00%

Deposit $1,000 per month

Date accurate as of December 5. Youth accounts and accounts with short-term honeymoon rates have been excluded from the comparison table.

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How much deposit will I need to buy a house?

A deposit of 20 per cent or more is ideal as it’s typically the amount a lender sees as ‘safe’. Being a safe borrower is a good position to be in as you’ll have a range of lenders to pick from, with some likely to offer up a lower interest rate as a reward. Additionally, a deposit of over 20 per cent usually eliminates the need for lender’s mortgage insurance (LMI) which can add thousands to the cost of buying your home.

While you can get a loan with as little as 5 per cent deposit, it’s definitely not the most advisable way to enter the home loan market. Banks view people with low deposits as ‘high risk’ and often charge higher interest rates as a precaution. The smaller your deposit, the more you’ll also have to pay in LMI as it works on a sliding scale dependent on your deposit size.

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

Can I get a home loan if I am on an employment contract?

Some lenders will allow you to apply for a mortgage if you are a contractor or freelancer. However, many lenders prefer you to be in a permanent, ongoing role, because a more stable income means you’re more likely to keep up with your repayments.

If you’re a contractor, freelancer, or are otherwise self-employed, it may still be possible to apply for a low-doc home loan, as these mortgages require less specific proof of income.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

Is there a limit to how many times I can refinance?

There is no set limit to how many times you are allowed to refinance. Some surveyed RateCity users have refinanced up to three times.

However, if you refinance several times in short succession, it could affect your credit score. Lenders assess your credit score when you apply for new loans, so if you end up with bad credit, you may not be able to refinance if and when you really need to.

Before refinancing multiple times, consider getting a copy of your credit report and ensure your credit history is in good shape for future refinances.

I have a poor credit rating. Am I still able to get a mortgage?

Some lenders still allow you to apply for a home loan if you have impaired credit. However, you may pay a slightly higher interest rate and/or higher fees. This is to help offset the higher risk that you may default on your repayments.

I can't pick a loan. Should I apply to multiple lenders?

Applying for home loans with multiple lenders at once can affect your credit history, as multiple loan applications in short succession can make you look like a risky borrower. Comparing home loans from different lenders, assessing their features and benefits, and making one application to a preferred lender may help to improve your chances of success

Will I be paying two mortgages at once when I refinance?

No, given the way the loan and title transfer works, you will not have to pay two mortgages at the one time. You will make your last monthly repayment on loan number one and then the following month you will start paying off loan number two.

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.

How do I know if I have to pay LMI?

Each lender has its own policies, but as a general rule you will have to pay lender’s mortgage insurance (LMI) if your loan-to-value ratio (LVR) exceeds 80 per cent. This applies whether you’re taking out a new home loan or you’re refinancing.

If you’re looking to buy a property, you can use this LMI calculator to work out how much you’re likely to be charged in LMI.

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.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.