The new range of no-fee, low-interest home loans

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Funny how things come full circle. It wasn't that long ago when home loans didn't come with monthly fees.

Then they did and now, thanks to the likes of Commonwealth Bank, UBank and non-bank lender Mortgage House, no-fee home loans are back in vogue.

Commonwealth Bank launched a no-fee home loan (that's no application fees, no ongoing fees and no exit fees) at what it believes is a highly competitive rate - 7.24%pa.

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Linked with a fee-free transaction account and no-annual-fee credit card, customers could technically avoid most fees and charges for the life of their loan. CBA's loan allows extra repayments and offers redraw but no mortgage offset facility. There is also no option to split the loan into a fixed and variable rate.

UBank's home loan, for refinancing only, is slightly more competitive and flexible. It allows you to split your loan up to four times, offers portability, flexibility in repayments and redraw but, like the CBA basic loan, has no mortgage offset. The initial variable rate is a low 6.99%, but after three years they offer a loyalty discount of 0.1%, taking the rate down to 6.89%.

Non-bank lender Mortgage House No Fee Home Loan has a low variable rate of 7.14% (if your loan to value ratio is less than 60%) or 7.19% (LVR 65% to 75%). The product is not available if your LVR is greater than 75%.

Just like the other two loans there are no upfront, ongoing, transaction or exit fees. It also comes with the option to split and unlimited free redraw.

MONEY VERDICT

CBA's no-fee home loan is a slightly restrictive basic home loan with an unexciting interest rate.

Based on comparison rates, ANZ's basic home loan is cheaper. Despite the $600 upfront fee, there are no ongoing fees so the overall cost is cheaper. So the tip is to compare comparison rates and not just the advertised rates.

UBank's online home loan is more flexible and cheaper, but it's only available for refinancing. As for Mortgage House's basic loan, there are better-priced variable loans on the market.

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