businessOwned by: ASX Listed
monetization_onFunded by: Retail deposits and wholesale capital markets
securityLMI Provider: Westpac LMI (WLMI) and Arch Capital (WLMI – A)
account_balanceLender type: Major Bank
Westpac has an impressive range of home loans and investment loans, an Australia wide branch and ATM network and a loyal customer base of over 13 million customers.
That being said, they’re actually not all things to all people. Their focus is primarily on the high net worth customers and foreign investors. They see their other brands such as St George, which is owned by Westpac, as having a bigger focus on first home buyers.
How do Westpac’s home loans compare?
They’re great at
- High net worth property investors
- Customers who speak another language
- Financing off the plan purchases for foreign investors
- First home buyers who would like to buy with help from their parents
- Working with mortgage brokers
- Fixed rate construction loans
- Fast loan approvals
- Their low doc loans are hard to qualify for but aren’t too expensive
- In-depth postcode risk guide which can give you an insight into the market that you’re buying in
- Working with their existing customers
- Branch access
But they’ve got some drawbacks…
- Their interest rates are not always competitive
- Their LMI can be expensive
- Unlikely to help people with a bad credit history
- Borrowing over 90% of the property value is tough if you aren’t an existing borrower
- Their credit scoring is tough and you may get declined for no apparent reason, especially if you have a low income to asset ratio
- As they’re a major bank, you may feel like just a number
What home loans types do they have?
Westpac’s Rocket Repay Home Loan and Rocket Repay Investment Loan are their two main loans. Combined with their Premier Advantage Package this gives a fully features home loan with an offset account and a great interest rate. It’s usually the best choice for larger loan sizes.
Westpac’s Flexi First Option Home Loan is a basic loan without an offset account. It’s normally only suitable for smaller loan sizes.
Westpac’s Equity Access Loan is a line of credit and is a little more expensive than their Rocket Repay Loan. For this reason it’s better just to get a Rocket Repay Loan as an offset account gives you the same effect as a line of credit anyway.
Their Fixed Rate Home Loans aren’t normally the lowest available so it pays to shop around. Under their professional package you can get a 0.2% discount for the life of the loan.
Their Low Doc Home Loan can be put in their Premier Advantage Package, but not quite with the same interest rate discounts. It’s still an ok deal, but we’d recommend shopping around as they are often better low doc loans available.
The Premium Bank
After the GFC, Westpac seemed to have taken advantage of the conditions and put their standard variable rate up above the other major banks and began calling themselves the Premium brand in the Westpac Group. Since most customers at that time wanted to be with a major bank, it didn’t seem to damage their market share like it normally would.
During that time we didn’t submit many applications to Westpac as we didn’t want our customers paying Premium interest rates for what appeared to us to be a normal service.
Westpac client story: Nathan, NSW
- To buy first home and qualify for a 90% home loan with waived Lenders Mortgage Insurance (LMI).
- Needed lender to accept actual income, not reduced income for tax purposes.
Dental researcher Nathan had been working as a self-employed contractor when he decided it was time to buy a place of his own.
He was earning a great income (around $180,000 per annum) and, with his 10% deposit, he was in a position to qualify for a reduced interest rate and a 90% LVR waived LMI home loan, a special policy exception that some of the major banks offer to professionals like dentists, veterinarians and doctors.
Nathan was actually renting a property where he was living and completing research so he was claiming his rent expenditure of around $35,000 per year as a tax deduction.
So effectively, his last 2 years tax returns were showing that he earned $150,000 rather than $185,000 which meant he wasn’t in a position to service or make the repayments on the $816,300 amount he needed to borrow.
After being provided with an accountant’s declaration explaining Nathan’s strategy to reduce his taxable income, Westpac was able to “add back” this rental spend as well as property depreciation of around $2,500 and one off expenses for replacement of tools at $21,500.
In the end, the bank assessed his income at around $185,000 instead of $150,000.
Nathan was able to get approved at 90% LVR, avoid the cost of LMI and buy his beach-front property at an interest rate of 4.08%.
Compare Westpac to other lenders
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