CUA Home Loan - Selling Point - Fixed Rate with 100% Offset Facility

July 17, 2017
Raymond Teh

Borrowers with an owner occupied mortgage would sometimes wish to be 100% insulated from interest rate fluctuation. Taking up a fixed rate product in its entirety, however, have disadvantages:

 

• Cap on additional repayment of $5,000 - $10,000 per annum

• Redraw facility is not offered

• 100% offset facility is not offered.

 

Partial offset facility, a marketing gimmick, is sometimes offered. CUA is Australia's largest credit union. It offers a niche where it premium fixed rate home loan comes with 100% offset facility. If a $500,000 mortgage is taken up and up to $100,000 can be deposited in the offset account in the next 3 years, the mortgage can be split into:

 

• $400,000 3 years basic fixed without offset facility

• $100,000 3 years premium fixed rate with 100% offset facility

 

The maximum amount that can be deposited in the offset account is $50,000. To get around this, the borrower can open two sets of premium fixed rate loan accounts.

CUA does not charge ongoing fees. Its:

• 2, 3 & 5 years basic fixed rate without offset is @ 3.89%, 3.96% & 4.28%

• 2, 3 & 5 years premium fixed rate with 100% offset is @ 4.06%, 4.13% & 4.45%

RT 14/7/17

Posted in: Interest rates

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