BankSA Fixed Rate Home Loan Review

Sally Tindall
Jul 14, 2016( 7 min read )

The basics

The BankSA Fixed Rate Home Loan starts from $10,000 and is available to every type of borrower, whether you’re a home buyer, owner-occupier, investor or refinancer.

More competitive than other home loans on the market, the BankSA Fixed Rate Home Loan is especially appealing if you have a smaller deposit or already hold several everyday banking products with BankSA, because you might also qualify for discounted interest rates and fees.

BankSA’s Fixed Rate Home Loan comes with a number of features including a redraw facility and repayment pause, which allows you to put your repayments on hold for a short period of time, providing a level of flexibility that isn’t available in some other fixed rate products.

A review of the highlights

Unlike some fixed home loans, BankSA allows borrowers to make additional payments of up to $10,000 each year. If circumstances arise where you decide to make extra payments on your mortgage, you’ll be able to gain access to these funds at a later date thanks to BankSA’s redraw facility.

Another key benefit, specifically for first home buyers or those with limited funds, is the family pledge scheme. This enables parents, siblings or children to help you purchase a home.

A type of cash-free guarantor loan, family pledge works by allowing relatives to leverage equity in their own home to provide additional security for a portion of your loan amount.

Not only does this make you a more appealing borrower in the bank’s eyes, it can reduce your loan-to-value ratio (LVR) to help you save on lender’s mortgage insurance (LMI).

Be aware however, that getting a relative to be your guarantor is something you need to think about carefully, because if you find you can’t meet your repayments, your nominated family member will be expected to make them on your behalf. And if they don’t – the equity they put up as collateral could be at risk.

A feature that benefits all applicants and helps to provide additional peace of mind is the repayment pause. If you have a legitimate absence from the workplace, such as maternity leave or an extended period of travel, you can pause or reduce your repayments for a period of three to 12 months for a one-off fee of $500. BankSA will also consider letting you pause your repayments if you are ahead on your mortgage.

If you’re an investor, you can select to pay your interest ahead of time in return for a small discount off your interest rate for the period you pay in advance. This is potentially an attractive option if you’re looking to save on interest repayments, particularly in light of the fact that as an investor, you’ll be charged a slightly higher rate – a practice the majority of lenders now do to help manage growth in the investor housing market.

BankSA offers a ‘rate lock’ feature that means you can lock in the current interest rate before your loan is settled. Just be aware the rate lock feature does come with a fee and will only secure a fixed rate for up to 90 days. The good news is that if the rate happens to fall in this time, BankSA will give you the lower rate.

At the end of your loan’s initial fixed rate period, interest rates can be re-fixed for another term. Fixing your loan term isn’t for everyone but it is a good option for those who prefer to make consistent repayments and insulate themselves from rising interest rates.

If you decide not to re-fix then the loan will automatically revert to BankSA’s standard variable interest rate at the end of the term. You can also choose between principal and interest repayments, or interest-only repayments, with relatively low annual interest rates.

Find out more about the Fixed Rate Home Loan here.

A review of the lowlights

One of the main downfalls of the BankSA fixed rate loan is the relatively high fees associated with this loan. For the fixed rate option there is an upfront fee, an ongoing fee and a discharge fee. If you combine your fixed rate loan with your BankSA credit card and transaction account into an BankSA Advantage Package, you will have a number of these waived however this package comes with a fairly sizeable annual fee so it is worth calculating whether you’ll actually be ahead.

A good way of checking how these fees will affect your bottom line is to add up the total fees you will be expected to pay over the life of the loan and weigh it up against any discounts you get on the interest rate.

As mentioned, the BankSA Fixed Rate loan does come with a redraw facility, which is a useful feature to have if you are ahead on your repayments, although it’s worth remembering that you’ll only be able to access a maximum of $10,000 each year. This sum will be dependent on the total additional payments you’ve made, and fees will apply on each approved redraw application.

This home loan also has a partial offset account which means you can reduce some of the interest you get charged by having additional funds in a linked BankSA transaction account.  However as the name suggests, you can only do this on part of your loan and so there are limited benefits of this feature.

The verdict

BankSA’s Fixed Rate loan offers competitive rates in addition to a range of features that provide more flexibility than the typical fixed loan product.

This flexibility makes the BankSA Fixed Rate loan a reasonable option for anyone looking for the security that a fixed product can bring. Fixed loans are particularly attractive for people who are entering the property market for the first time and are nervous about rate rises. Investors who rely on rental income to help cover the cost of the repayments might also like the peace of mind that a fixed rate can bring.

If you are looking at taking out this loan, it is worth considering bundling together your BankSA products to get discounts on your interest rates, but make sure it makes economic sense for you to do this. The last thing you want when you are taking out a large amount of debt is another credit card, for example, particularly if you’re someone who is likely to max it out and struggle to pay it off.

BankSA might sound like a small lender however it is owned by the Westpac group – one of Australia’s biggest banks. It’s the biggest bank in South Australia and has a wide network of branches and ATMs in the state. It also has a customer service centre which you can reach by phone and an online banking platform.

The bottom line

Before making a decision about whether the BankSA Fixed Rate Home Loan is the right mortgage for you, compare it against similar fixed rate products. A good way of checking is to use RateCity’s home loan calculator to see what the different interest rates will have on your monthly repayments and on the total cost of you loan.

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.

About the author

Sally Tindall

Sally Tindall is RateCity's Money Editor.

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