How to get the edge at auctions

How to Get the Edge at Auctions

Rates and fees last updated on

A simple way to have more to spend

Selecting the right home loan with a low interest rate can help you get through to auction and improve your chance of winning the property on the day.

All things being equal, does a lower interest rate give you a competitive edge at auction day?

Maximise your savings & bidding potential

In a fast-paced and competitive environment, attending an auction for the first time can be a stressful proposition. Familiarising yourself with the market value of the area, determining your pre-bidding limit and understanding the process of auctioning can help you secure a place at auction and bidding successfully on the day.

We demonstrate how a low rate loan could give you the upper hand when bidding against property-hungry competitors at auction day. In a hypothetical situation, we compare how a lower interest rate could see you borrowing up to $515 100 more compared to a loan with a less competitive rate.

As your home loan determines the amount you want to spend on your first home, it is important that you don’t let interest rates reduce any savings you can make on auction day. Ultimately, finding a loan package with a competitive interest rate will mean that you have leverage to outbid other people during auction.

Auction advice from The Block 2015 contestants

He who has the lowest interest rate, wins the auction

By obtaining a low interest loan, you will be able to borrow more from your lender due to higher serviceability of your loan repayments. That is, low interest loans see you making smaller monthly repayments as you have less interest to repay.

Loans with a competitive interest rate will receive less impact from official rate rises as the interest is lower to begin with, so you will not be susceptible to interest rate fluctuations.

Ultimately, a low interest loan will provide you with increased purchasing power as the lender will perceive you be in a stronger position to afford your monthly repayments and you can put more money towards your bidding limit.

Get the edge at auctions

How do interest rates affect your purchasing power?

We’ve created a hypothetical situation to illustrate the difference in purchasing power between a loan with high interest, compared to one with a lower interest rate.

Josh and Skye have their heart set on a stunning 3 bedroom home in Newcastle valued at $700 000. They are looking to take out a loan with an interest rate of 5.25% over a 30 year timeframe. With a joint weekly net income of $1500, two dependent children and a combined credit card limit of $5000, they can borrow just $509 000 for their loan.

On the other hand, Matilda and James have their eye on the same property in Newcastle, and they also plan to attend the auction next month. With the exact same loan period, joint weekly net income, two children and combined credit card limit, they were fortunate enough to find a lender that offered a lower rate. With this lower interest rate of 4.25%, they can borrow up to $566 000 for their loan.

Property ValueJoint Weekly Net IncomeNumber of DependentsCredit Card LimitInterest RateBorrowing Amount
Josh & Skye$700 K$15002$50005.25%$509 000
Matilda & James$700 K$15002$50004.25%$566 000

From this, we can see that by finding a loan attached to a lower interest rate, Matilda and James have increased purchasing power. With the ability to borrow $515 100 more than Josh and Skye, they have a higher threshold for their bidding strategy and would be more inclined to win the property at auction.

In turn, this could put them one step closer to securing their future home in Newcastle.

By owing less interest on your mortgage, you benefit from gaining mortgage pre-approval and by having increased leverage to bid higher during auction.

Get the edge at your next auction by comparing the loans below

Rates last updated July 22nd, 2017
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Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
loans.com.au Essentials - Variable (Owner Occupier, P&I)
A basic home loan with a competitive rate and low fees.
3.64% 3.66% $0 $0 p.a. 80% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.59% 4.48% $0 $375 p.a. 85% Go to site More info
UBank UHomeLoan Variable Rate - Standard Variable Rate Value Offer (Owner Occupier P&I)
Combine a low variable interest rate and free redraw with no application or ongoing fees.
3.74% 3.74% $0 $0 p.a. 80% Go to site More info
3.69% 3.72% $0 $0 p.a. 80% Go to site More info
Reduce Home Loans Rate Buster 100% Offset Variable Home Loan - Up to $750k (LVR <=80%)
Borrow up to 80% LVR with no ongoing fees and a 100% offset account.
3.54% 3.54% $440 $0 p.a. 80% Enquire now More info
loans.com.au Offset Variable - Up to 80% LVR (Owner Occupier P&I)
Take advantage of a 100% offset account along with no annual or application fees.
3.72% 3.74% $0 $0 p.a. 80% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I) First Home Buyer Special
A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.69% 4.86% $0 $395 p.a. 90% Go to site More info
ING DIRECT Orange Advantage Loan - $150,000+ (LVR <=80% Owner Occupier, P&I)
A fully featured home loan with an offset account and discounts available. $1000 cashback offer available for loans over $300k. Terms and conditions apply.
3.79% 4.11% $0 $299 p.a. 80% Go to site More info
CUA Kick Start 2 Year Introductory Variable Home Loan - (Owner Occupier, P&I)
A competitive rate for owner occupiers looking to buy or refinance.
3.79% 3.97% $0 $0 p.a. 90% Go to site More info
Mortgage House Advantage Home Loan 80 - Special Owner Occupier ($500K+)
A low interest rate home loan that lets you borrow up to 80% of the property's value.
3.73% 3.88% $0 $10 monthly ($120 p.a.) 80% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier Special Rate, P&I)
Owner-occupiers can lock in a competitive rate with no ongoing fees. Conditions apply.
3.84% 4.86% $0 $0 p.a. 95% Go to site More info
SCU Basic Variable Rate Home Loan
A basic home loan with a low interest rate and a redraw facility available. Take out a new SCU loan and enjoy $500 cash back on loans above $150k, terms and conditions apply.
3.77% 3.81% $200 $0 p.a. 95% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I)
A fixed rate package with flexible repayment options. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.88% 4.89% $0 $395 p.a. 95% Go to site More info
ClickLoans The Online Home Loan - Owner Occupier ≤ 80% LVR, P&I
Enjoy a competitive variable interest rate, no application fee, limited annual fees and an offset account with redraws.
3.69% 3.69% $0 $0 p.a. 80% Go to site More info
Greater Bank Great Rate Discount Variable with Family Pledge Home Loan - Up to 110% LVR
Discounted rate available with family pledge loans. Family pledge loans require no LMI and no deposit. NSW, Qld and ACT only.
3.89% 3.89% $0 $0 p.a. 110% Go to site More info
IMB Budget Home Loan - LVR <=90% (Owner Occupier)
Get a competitive rate without features you may not use.
3.97% 4.02% $445 $0 p.a. 90% Go to site More info
Finsure Home Loan Deal
Enjoy a low variable rate with no application fee.
3.69% 4.03% $0 $299 p.a. 80% Enquire now More info
Heritage Bank Discount Variable Home Loan - Special Rate Offer (Owner Occupier) New Customers Only
A low rate variable home loan offer with no monthly fees or application fee charge.
3.99% 4.04% $600 $0 p.a. 90% Go to site More info
Bankwest Equaliser Home Loan - LVR ≤80% (Owner Occupier, P&I & $200k+) new customers only
Enjoy a variable 3 year introductory rate with the Bankwest Equaliser Home Loan.
3.72% 4.19% $0 $0 p.a. 80% Go to site More info
SCU My Life Fixed Rate Home Loan Package - 3 Years
Fix your rate for 3 years and borrow up to 95% LVR. Enjoy $500 cashback on new loans above $150k. Terms and conditions apply.
3.69% 4.00% $0 $350 p.a. 95% Go to site More info
Bank Of Queensland Economy Home Loan - Variable (Owner Occupier)
Take advantage of a basic no-frills home loan with extra repayments and fee free redraw.
3.89% 4.04% $300 $10 monthly ($120 p.a.) 95% Go to site More info
ME Flexible Home Loan Fixed - 2 Year Fixed Rate (Owner Occupier, P&I)
No application or ongoing fees and a competitive 2 year fixed rate.
3.88% 4.84% $0 $0 p.a. 95% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 2 Year Fixed LVR ≤85% ($150K+ Owner Occupier)
Discount off an already competitive 2 year fixed rate for loans over $150k. NSW,QLD and ACT residents only.
3.79% 4.46% $0 $375 p.a. 85% Go to site More info
State Custodians Low Rate LOC - LVR up to 80% (Owner Occupier)
Access the equity in your home with a competitive interest rate and no application fee.
3.69% 3.72% $0 $0 p.a. 80% Go to site More info
Bank of Queensland Fixed Rate Home Loan - 3 Year Fixed Rate Discount Rate $150k+ <80% LVR (Owner Occupier, P&I)
This fixed rate loan includes a special offer for new lending of $150000 with an LVR of 80% or less. Offer extended.
3.79% 4.44% $300 $10 monthly ($120 p.a.) 80% Go to site More info
CUA Fresh Start Basic Variable Home Loan - Owner Occupier
A basic home loan with flexible repayment options.
3.99% 4.00% $0 $0 p.a. 90% Go to site More info
Beyond Bank Low Rate Special Home Loan - LVR <70%
A special low variable rate for owner occupiers with 100% offset account and no application or ongoing fees.
3.83% 3.83% $0 $0 p.a. 70% Go to site More info
Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier, P&I)
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.84% 4.22% $0 $395 p.a. 95% Go to site More info
QT Mutual Bank Mortgage Saver Home Loan
A low rate home loan with no application or ongoing fees. Note that to be eligible for this loan you must be QLD resident.
3.95% 3.95% $0 $0 p.a. 95% Go to site More info
Greater Bank Great Rate Home Loan - Discounted Variable ($150K+ Owner Occupier)
A competitive variable rate with a redraw facility. NSW, QLD and ACT residents only.
3.99% 3.99% $0 $0 p.a. 85% Go to site More info
CUA Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier)
A fixed rate home loan with no ongoing fees and flexible repayment options.
3.89% 4.72% $600 $0 p.a. 95% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 3 Year Fixed (Owner Occupier Special Rate, P&I)
A limited time fixed rate home loan with extra repayment abilities. Conditions apply.
3.89% 4.78% $0 $0 p.a. 95% Go to site More info
ME Flexible Home Loan Fixed - 3 Year Fixed Rate (Owner Occupier, P&I)
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
4.19% 4.82% $0 $0 p.a. 95% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Years Fixed (Standard Rate, P&I)
Enjoy a low interest rate and borrow up to 95% (with LMI) of your property's value.
4.54% 4.99% $0 $0 p.a. 95% Go to site More info
NAB Base Variable Rate Home Loan - Owner Occupier (P&I)
A competitive no frills home loan. 350K NAB Rewards Points offer available. Terms and conditions apply.
4.17% 4.21% $600 $0 p.a. 95% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 1 Year Fixed (Standard Rate, P&I)
Investors can take advantage of a short term fixed rate with no application or ongoing fees.
4.54% 5.04% $0 $0 p.a. 95% Go to site More info
NAB Choice Package Home Loan - 5 Year Fixed (Owner Occupier P&I)
A competitive loan with flexible features. 350K NAB Rewards Points offer available. Terms and conditions apply.
4.59% 5.01% $0 $395 p.a. 95% Go to site More info
IMB Essential Home Loan - LVR <=90% (Owner Occupier)
Access to redraw facility and offset account without the annual fee.
4.19% 4.19% $0 $0 p.a. 90% Go to site More info
ANZ Simplicity PLUS Home Loan - Special Offer (Owner Occupier, P&I)
Enjoy a basic home loan with a high LVR and no application or ongoing fees.
4.03% 4.07% $0 $0 p.a. 95% Enquire now More info
3.78% 3.79% $600 $0 p.a. 90% Enquire now More info
St.George Basic Home Loan - Promotional Rate (Owner Occupier, P&I)
A no frills loan with a competitive rate and a maximum LVR of 95%.
3.80% 3.81% $0 $0 p.a. 95% Enquire now More info
Commonwealth Bank Wealth Package Fixed Home Loan - 2 Year Fixed (Owner Occupier) P&I
A package home loan with fee free extra repayments available during the fixed term.
3.99% 4.99% $0 $395 p.a. 95% Enquire now More info
St.George Fixed Rate Advantage Package -  2 Year Fixed Rate (Owner Occupier, P&I)
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cashback available for refinancers. Conditions apply.
3.99% 4.98% $0 $395 p.a. 95% Enquire now More info
NAB Choice Package Variable Rate - $250k to $749,999 P&I (Owner Occupier)
A packaged low rate interest offer from NAB. Includes mortgage offset.
4.39% 4.78% $0 $395 p.a. 95% Go to site More info
Westpac Fixed Options Home Loan Premier Advantage Package - 2 Years, P&I
A low interest rate home loan with a low service fee.
3.88% 4.88% $0 $395 p.a. 95% Enquire now More info
4.39% 5.42% $300 $10 monthly ($120 p.a.) 95% Enquire now More info
Virgin Reward Me Variable Home Loan - LVR <= 80% ($750k+ Owner Occupier, P&I)
Earn Velocity points on a competitive variable rate home loan with flexible features.
3.79% 3.92% $0 $10 monthly ($120 p.a.) 80% Enquire now More info

Mortgage pre-approval

When evaluating your financial situation, and the type of home loan you have taken out, it will be more attractive to the lender if your loan incorporates a low-interest rate as this carries less risk. Therefore the lender may be more inclined to approve your mortgage pre-approval application if they feel confident that you can meet your mortgage repayments.

Before heading to auction, you will need to apply for mortgage pre-approval with your nominated lender. During this process, your lender will assess your ability to make your mortgage repayments based on factors such as your deposit amount, personal income and expenses such as existing loans or credit card accounts.

Applications may be declined if you have a poor credit rating, if you have several enquiries on your credit file, if interest rates have increased significantly or if you need to borrow more than 80% of the property value.

However, given that you meet all of the given criteria and with a competitive loan rate, your lender should approve your application and you should have a good chance of bidding strategically at auction day.

If you win the auction, you will be required to pay a deposit that is 10% of the purchase price. This amount will need to be paid on completion of the auction, so ensure you have these funds available on the day.

Additional features to consider

While a low interest loan can give you a competitive edge to proceed to auction, and to bid more competitively on the day, it is important to realise that there are other home loan features that could also impact your ability to secure a property.

Redraw facilities, ongoing fees, application fees and offset accounts are just some additional features to consider when selecting your home loan. These features can also influence your ability to repay your mortgage and bid more strategically at auction.

ALSO READ: The five home loan features all first home buyers should consider

ALSO READ: The expert's tips on winning an auction


Taking out a low-interest loan could potentially increase your probability of getting through to the auction, and bidding successfully on the day. This is because you will have the leverage to bid higher than those who have a lower bidding threshold due to the higher interest that they have to repay on their mortgage.

As previously mentioned, there are several home loan features that could also impact your ability to secure your first home, both before and during auction day.

We wish you all the best in your auctioning!

Belinda Punshon

Belinda is a journalist here at finder.com.au. Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

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Bank of Queensland Fixed Rate Home Loan - 3 Year Fixed Rate Discount Rate $150k+ <80% LVR (Owner Occupier, P&I)

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NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I)

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Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)

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