CUA Fresh Start Variable Loan Review

Darren Pearce

Darren Pearce

( 7 min read )

The basics

The CUA Fresh Start Variable Home Loan provides owner occupiers and investors with a competitive variable rate, no establishment, annual or monthly fees along with other premium loan product features such as 100 per cent offset and redraw facilities.

The CUA Fresh Start Variable Home Loan is designed to suit borrowers who have access to a larger deposit, value a competitive interest rate but don’t want this to come at the expense of flexibility, additional features and banking convenience.

To be eligible for this loan customers are required to have a deposit of 20 per cent – or if you are looking to refinance – you must hold a 20 per cent equity in your property. The loan can be for your primary place of residence, investment property or land where you are planning to build a home. The loan is aimed at new customers but also accommodates both current CUA and CUA Health customers. If this is you, CUA specify you need an additional amount in borrowings on your existing loans to be eligible.

The highlights

With an understanding that there’s more to life than paying off your mortgage, CUA’s Fresh Start Variable Home Loan helps you to save on the amount of interest you pay and reduce your loan term through the free 100 per cent Multi-Account Offset facility. Depositing your income directly into at least one of your CUA Everyday accounts allows you to use the combined balance with the free 100 per cent offset facility. The interest is then calculated daily on the total outstanding loan amount less the total funds in your offset account. For example, if you have a loan of $395,000 and a combined multi-account balance of $15,000, your interest is charged on $380,000.

The CUA Fresh Start Variable Home Loan offers borrowers the incentive of fee relief with no establishment fees, monthly or annual fees or split loan fees, which can mean significant savings over the life of your loan. You will not be able to avoid some upfront fees, loan discharge fees or security administration and other legals, but these fees are reasonably standard to most comparable offers. The mortgage space is increasingly competitive so it’s always in your interest to research the alternatives and try to negotiate the best deal you can.

We all know that every little bit helps when it comes to paying down your loan. What may seem inconsequential amounts now, can make a big difference in reducing the life of your loan. If you happen to find yourself with some extra cash or a larger lump sum the CUA Fresh Start Variable package allows you to make additional payments on the home loan without incurring any additional charges.

The CUA Fresh Start Variable Home Loan gives you repayment flexibility. You can choose to make principal and interest or interest only and set your repayments at monthly, fortnightly or weekly to suit your income and budget. Interest-only repayments are generally lower than Principal and Interest payments, so if you are an investor or first home buyer looking to take advantage of lower repayments. Bear in mind you will be restricted to monthly payments only if you choose the Interest only option.

For many borrowers the ability to gain access to additional payments made on their home loan is an attractive option. The CUA Fresh Start Variable provides you with a redraw facility with fee-free access. There is a minimum redraw amount but no limit on how many redraw transactions you can make, which means you can get hassle free access to funds when you need to.

If you are currently a customer of the big four banks and looking to change but concerned about ATM convenience, then you don’t need to be. The CUA and its credit union affiliates share the rediATM network which is the largest ATM network in the country with more than 3,400 ATMs.

CUA maintains over 60 branches located around Australia to suit customers who prefer the local convenience and more personal banking experience. Customers who prefer their banking experience to be when and where it suits them are taken care of via CUA’s online, mobile and over the phone options. You can gain access to your account through the online and mobile App along with CUA’s  ‘Telebanker’ which is available 24 hours a day seven days a week.

More specific information on the CUA Fresh Start Variable Loan is available here.

The lowlights

The CUA Fresh Start Variable Home Loan may not be the right fit for all customers, particularly if you are looking to borrow more than 80 per cent of the property value. This higher equity hurdle may result in you being ineligible or having to pay Lenders Mortgage Insurance, but as always it’s important to check with CUA as to your specific circumstances.

Alternatively, CUA also offers a ‘no frills’ loan to satisfy highly price sensitive borrowers who are willing to compromise on some features. The CUA Fresh Start Basic Variable provides borrowers with a competitive rate and no monthly fees, but does not offer access to other features like a 100 per cent offset account. It also requires all borrowers to establish an Everyday Banking account on application. This locks your income payments to CUA but comes with a linked debit card, and the convenience of online banking.

If you want to set a budget for loan payments each month and value the peace of mind knowing your loan is protected from interest rate rises, a fixed interest option is the answer. Whilst the Fresh Start Variable Home Loan does not offer a fixed interest option you may consider a split loan facility which is offered as one of the features. This may be effective during periods where interest rate movements are difficult to predict. Splitting your home loan allows you to hedge your bets a little. If rates move up, you get the benefit of the lower rate and as interest rate drop you can get the benefit of the drop.

The verdict

If you are looking for a competitive interest rate, have managed to save the 20 per cent deposit and are considering a change from the big four banks, CUA Fresh Start Variable Home Loan may offer an attractive alternative to mainstream home loan products.

If however you are a customer who values ‘fully featured’ loan packages which provide bundling options across a range of financial products and are willing to incur the fees generally associated with the provision of these additional features, you may find the big four banks provide more comprehensive alternatives.

With its Fresh Start Variable Home Loan, CUA has created a product which will appeal to borrowers seeking a balance between price, flexibility and convenience. If this is you, then the CUA Fresh Start Variable can be a good match to balance your home loan objectives and lifestyle.

The bottom line

When choosing a home loan, it’s important to work out what you want from your loan and how much it will cost you. Given the wide range of loans on offer, different interest rates, product features and fees, it pays to shop around to find the loan that fits your needs and circumstances.

Some loans offer features that may be appropriate for your situation and result in savings over the life of the loan.

If you are in any way unsure, it could be worthwhile seeking professional financial advice to determine if this product is the right one for you.

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

Darren Pearce

Darren Pearce

Darren Pearce is a personal finance expert and freelance writer.

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