Ubank Home Loans & Rates Comparison

Ubank keeps its home loan range relatively small and digitally focused, with three main options:

• Neat Variable Home Loan: Ubank's no-frills variable loan. It has no annual fee and allows unlimited additional repayments and free redraw, but it does not include an offset account.

• Flex Variable Home Loan: Ubank's more fully featured variable loan. It includes 100% offset across multiple eligible Ubank Spend, Bills and Save accounts, unlimited additional repayments, free redraw and the option to split the loan with a fixed rate. It has a $250 annual fee.

• Flex Fixed Home Loan: Available with fixed terms of one, two, three and five years. It allows up to $20,000 in additional repayments and redraw during the fixed term and can be split with a Flex Variable loan.

Ubank also promotes selected home loans for eligible buyers and investors with a 10% deposit and no lenders mortgage insurance (LMI). This is a meaningful point of difference for borrowers who do not have a 20% deposit, although higher-LVR interest rates are significantly higher.

Neat Variable Home Loan

The Neat Variable Home Loan is Ubank's simpler, lower-fee option. It is available to owner occupiers and investors and includes:

• no annual fee;

• unlimited additional repayments;

• free redraw of eligible extra repayments; and

• an online application process.

Its lowest owner-occupier principal and interest rate is 6.09% p.a. (comparison rate* 6.11% p.a.) at an LVR of up to 60%. The same rate applies at up to 70% LVR, before increasing to 6.14% p.a. (comparison rate* 6.16% p.a.) at up to 80% LVR.

Neat is likely to suit borrowers who want a straightforward variable home loan and do not expect to keep enough money in an offset account to justify paying an annual fee.

Flex Variable Home Loan

The Flex Variable Home Loan includes 100% offset across multiple eligible Ubank Spend, Bills and Save accounts. This lets borrowers separate their money into different accounts while using the combined balances to reduce the interest charged on the loan.

Flex also offers unlimited additional repayments, free redraw and the ability to split the loan with a Flex Fixed rate. Its lowest owner-occupier principal and interest rate is 6.09% p.a. (comparison rate* 6.33% p.a.) at an LVR of up to 60%.

One of Ubank's main strengths is that the Flex and Neat loans have the same advertised interest rate across their lower LVR tiers. In other words, Ubank does not charge a higher headline rate for adding an offset. The cost difference instead comes through Flex's $250 annual fee, which is reflected in its higher comparison rate.

At an interest rate of 6.09% p.a. (comparison rate* 6.33% p.a.), an average offset balance of around $4,100 would theoretically save enough interest to cover the $250 annual fee. The actual benefit will depend on how the loan and offset balances change throughout the year.

Ubank applies risk-based pricing, meaning borrowers with larger deposits or more equity receive lower rates.

The lowest owner-occupier principal and interest rate is 6.09% p.a. (comparison rate* 6.11% p.a.) for Neat and 6.09% p.a. (comparison rate* 6.33% p.a.) for Flex. The headline rate remains the same at up to 70% LVR and rises slightly at up to 80% LVR.

The increases are much larger above 80% LVR. This means Ubank's selected 10% deposit, no-LMI option could save an eligible borrower a substantial upfront insurance cost, but the higher interest rate may offset some of that benefit over time. Borrowers should compare the total cost of the higher rate against the LMI they might pay with another lender.

Fixed rates are not Ubank's strongest area. All four terms are more expensive than most similar fixed home loans in our database, with the two- and three-year terms particularly uncompetitive.

The Flex Fixed loan does offer more flexibility than some fixed products. Borrowers can make and redraw up to $20,000 in additional repayments during the fixed term and split the loan with a Flex Variable portion. An optional 90-day rate lock is available for $500.

The $250 annual fee also applies to Flex Fixed. Borrowers considering a split loan should confirm whether one annual fee covers the complete Flex structure; Ubank describes the fee as covering changes across up to five Flex split loans.

Ubank offers selected owner-occupier and investor loans with a deposit as low as 10% without charging lenders mortgage insurance. This could save eligible borrowers thousands of dollars compared with a lender that requires LMI above 80% LVR.

For owner-occupier purchases with principal and interest repayments, Ubank allows a maximum LVR of up to 90%. The maximum is generally 85% when refinancing. Applications with an LVR above 85% are limited to a maximum loan amount of $2 million.

The trade-off is pricing. Ubank's rates increase materially above 80% LVR, so avoiding LMI does not automatically make it the cheapest option over the life of the loan. This feature is most valuable for borrowers who qualify, want to buy sooner and would otherwise face a substantial LMI premium.

Both the Neat Variable and Flex Variable loans are available to property investors. Neat provides the lower-fee option for investors who do not need an offset, while Flex adds multiple offset accounts and interest-only repayment options.

Ubank's published eligibility information indicates that investment home loans are generally available up to 80% LVR when refinancing. Investors can also be eligible for selected 10% deposit loans with no LMI when purchasing, subject to Ubank's lending criteria.

Investors should pay particular attention to the difference between principal and interest and interest-only pricing. Interest-only repayments are available through Flex, but rates are generally higher and the loan balance does not reduce during the interest-only period.

Ubank is an online bank and its home loan process is designed to be completed remotely. Borrowers can apply online, track their application and manage their banking and home loan through the Ubank app, with lending specialists available by phone when support is needed.

This will appeal to borrowers who are comfortable handling their finances digitally. People who prefer regular face-to-face support or an extensive branch network may find a traditional bank or broker-assisted application more suitable.

Ubank is part of National Australia Bank Limited. Its products are issued by NAB under the Ubank brand, rather than by a separate customer-owned bank.

Ubank is likely to be most appealing to digitally confident borrowers who want a relatively simple loan with flexible repayment features. Its variable rates sit around the middle of the market, while the Flex offset loan compares more favourably with other offset products.

The Neat loan is the logical choice for borrowers who want to minimise fees and do not need an offset. Flex is more compelling for borrowers who can keep enough money in their linked accounts to recover the $250 annual fee through interest savings.

Ubank may also be worth considering for eligible borrowers with a 10% deposit who could avoid LMI. However, borrowers prioritising a highly competitive fixed rate, branch access or a broader range of specialist lending options are likely to find stronger alternatives elsewhere.