How to get the edge at auctions

How to Get the Edge at Auctions

Rates and Fees verified correct on December 8th, 2016

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 December 8th, 2016
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Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
HSBC Home Value Loan - Resident Owner Occupier only
Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR.
3.55% 3.57% $0 $0 p.a. 90% Go to site More info
3.74% 3.74% $0 $0 p.a. 80% Go to site More info
loans.com.au Essentials - New Purchases Only Up to 80% LVR (Owner Occupier, P&I)
Special offer ends 15 December. A low variable rate for new purchases as well as no application or ongoing fees.
3.39% 3.41% $0 $0 p.a. 80% Go to site More info
State Custodians Standard Variable Spring Special - LVR 80% (Owner Occupier)
Special Owner Occupier Rate. Free Offset Account.
3.59% 3.92% $0 $299 p.a. 80% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed ($150K+ Owner Occupier)
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.59% 4.42% $0 $375 p.a. 85% Go to site More info
ClickLoans The Online Home Loan - Owner Occupier ≤ 80% LVR
Enjoy a competitive interest rate when you have a deposit of at least 20%.
3.69% 3.69% $0 $0 p.a. 80% Go to site More info
loans.com.au Offset Variable - New Purchases Only Up to 80% LVR (Owner Occupier, P&I)
Special offer ends 15 December. No application or annual fees, and access to a 100% offset account.
3.49% 3.51% $0 $0 p.a. 80% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier)
A fixed rate package loan with flexible repayments options. 250,000 Velocity Frequent Flyer point offer, conditions apply.
3.75% 4.87% $0 $395 p.a. 95% Go to site More info
Bank Australia Basic Home Loan - Variable (Owner Occupier)
A competitive variable that allows borrowers to borrow from a minimum of $100,000 and $0 ongoing fee.
3.59% 3.60% $0 $0 p.a. 80% Go to site More info
CUA Kick Start Variable Home Loan - 2 Years Introductory (Owner Occupier)
Borrow up to 90% LVR and enjoy an introductory rate for the first 2 years.
3.69% 3.87% $600 $0 p.a. 90% Go to site More info
Australian Unity Kick Starter Home Loan
$0 ongoing service fees, maximum 80% LVR and a linked transaction account.
3.79% 3.82% $600 $0 p.a. 80% Go to site More info
State Custodians Breathe Easy Spring Special  - LVR 80% (Owner Occupier)
Special Owner Occupier Rate. Free Offset Account.
3.72% 3.75% $0 $0 p.a. 80% Go to site More info
ME Bank Flexible Home Loan Fixed - 3 Year Fixed Rate (Owner Occupier)
A competitive 3 year fixed rate with a redraw facility and split loan options, plus no application fee.
3.84% 4.66% $0 $0 p.a. 95% Go to site More info
Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier)
Apply for a new owner occupier loan or refinance from another lender and receive this discounted rate.
3.74% 4.12% $0 $395 p.a. 95% Go to site More info
IMB Budget Home Loan - LVR <=90% (Owner Occupier)
A competitive budget rate without any unwanted bells and whistles.
3.87% 3.92% $445 $0 p.a. 90% Go to site More info
Switzer Home Loan
No upfront or ongoing fees and a competitive variable rate for owner occupiers.
3.89% 3.89% $0 $0 p.a. 90% Go to site More info
Greater Bank Ultimate Home Loan - Discounted Variable ($150K+ Owner Occupier)
A discounted rate with 100% offset account. NSW, QLD and ACT residents only.
3.89% 4.27% $0 $375 p.a. 85% Go to site More info
loans.com.au Essentials - Variable Refinancers Only (Owner Occupier, P&I)
A low-interest rate loan suited for refinancing with no application or ongoing fees.
3.59% 3.61% $0 $0 p.a. 80% Go to site More info
3.94% 4.33% $0 $395 p.a. 90% Go to site More info
State Custodians Standard Variable Spring Special - LVR 90% (Owner Occupier)
Special Owner Occupier Rate. Free Offset Account.
3.69% 4.02% $0 $299 p.a. 90% Go to site More info
Bank Australia Premium Home Loan Package - 2 Year Fixed (Owner Occupier) LVR < 80%
Buy a new home even if you haven't yet sold your existing one with the bankmecu Bridging Loan
3.69% 4.24% $0 $350 p.a. 95% Go to site More info
IMB Accelerator Home Loan  - LVR <=80% $300k+ (Owner Occupier)
A two year discounted rate which reverts to an ongoing life of loan discount afterwards.
3.64% 4.39% $445 $0 p.a. 80% Go to site More info
Greater Bank Great Rate Home Loan - Discounted Variable ($150K+ Owner Occupier)
A competitive rate with redraw facility. NSW, QLD and ACT residents only.
3.89% 3.89% $0 $0 p.a. 85% Go to site More info
Beyond Bank Low Rate Special Home Loan
A special low variable rate for Owner Occupier with 100% offset account and no application or ongoing fees.
3.73% 3.73% $0 $0 p.a. 70% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 2 Years Fixed (Owner Occupier)
Enjoy a low interest rate and borrow up to 95% (with LMI) of your home value.
3.99% 4.81% $0 $0 p.a. 95% Go to site More info
ClickLoans The Online Investor Home Loan - LVR <70%
An investment home loan with competitive rate and 100% offset account.
3.79% 3.79% $0 $0 p.a. 70% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 5 Year Fixed ($150K+ Investor)
A discounted 5 years fixed rate with a redraw facility and no application fee.
4.09% 4.55% $0 $375 p.a. 85% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 2 Year Fixed ($150K+ Owner Occupier)
Discount off an already competitive 2 year fixed rate for loans over $150k. NSW,QLD and ACT residents only.
3.74% 4.40% $0 $375 p.a. 85% Go to site More info
AMP Essential Home Loan  -  Owner Occupier
Take advantage of a redraw facility, competitive variable rate and no application or settlement fees for a limited time.
3.98% 4.00% $350 $0 p.a. 90% Go to site More info
Bank Australia Premium Home Loan Package - LVR<=80% $700k + (Owner Occupier)
Enjoy the discounted interest rate with redraw facility and no ongoing fees.
3.74% 4.09% $0 $350 p.a. 95% Go to site More info
CUA Kick Start Variable Home Loan - 2 Years Introductory (New Investment Only)
Enjoy a 2 year introductory rate with CUA Kickstart Variable Home Loan.
3.69% 4.28% $600 $0 p.a. 90% Go to site More info
Newcastle Permanent Building Society Fixed Rate Home Loan - 1 Year Fixed (Owner Occupier)
Get a short term fixed rate for that investment property with no application or ongoing fees.
3.99% 4.90% $0 $0 p.a. 95% Go to site More info
Switzer Fixed Rate Home Loans - 2 Years Fixed Rate
A competitive 2 year fixed rate with your very own lending service manager.
3.97% 3.99% $0 $0 p.a. 80% Go to site More info
Australian Unity Health, Wealth and Happiness Package - (Owner Occupier)
Get a 0.60% discount on your rate, a 100% offset account and no ongoing fees.
3.99% 4.02% $600 $0 p.a. 90% Go to site More info
loans.com.au Fixed - 2 Year Fixed (Owner Occupier)
2 years fixed interest terms with no application fee or ongoing fees, loans.com.au has won a range of awards for their home loans.
3.89% 3.72% $0 $0 p.a. 90% Go to site More info
CUA Fixed Rate Home Loan - 2 Year Fixed (Owner Occupier)
A fixed home loan with no ongoing fees and flexible repayments options.
3.69% 4.56% $600 $0 p.a. 95% Go to site More info
IMB Essential Home Loan - LVR < 80% (Owner Occupier)
Access to redraw facility and offset account without the annual fee.
4.09% 4.09% $0 $0 p.a. 80% Go to site More info
3.89% 3.89% $0 $0 p.a. 80% Go to site More info
NAB Base Variable Rate Home Loan - Owner Occupier (P&I)
A competitive no frills home loan with no application fees for a limited time. 250,000 Velocity Frequent Flyer point offer, conditions apply.
4.10% 4.14% $0 $0 p.a. 95% Go to site More info
Australian Unity Wealth Builder Investor Package Home Loan - Variable
An investment loan with no ongoing fees and borrow up to 90% LVR.
4.19% 4.22% $600 $0 p.a. 90% Go to site 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.
4.40% 4.79% $0 $395 p.a. 95% Go to site More info
ME Bank Flexible Home Loan Fixed - 2 Year Fixed Rate (Owner Occupier)
No application or ongoing fees and a competitive 2 year fixed rate.
3.84% 4.75% $0 $0 p.a. 95% Go to site More info
Westpac Flexi First Option Home Loan - 3 Years Introductory Special Offer (New Owner Occupier, P&I)
A limited time deal for new owner occupiers. Advertised rate includes 1.03%p.a. discount for the first two years.
3.99% 4.37% $0 $0 p.a. 95% More info
NAB Choice Package Home Loan - 5 Year Fixed (Owner Occupier)
A competitive loan with flexible features. 250,000 Velocity Frequent Flyer point offer, conditions apply.
4.59% 5.02% $0 $395 p.a. 95% Go to site More info
Suncorp Home Package Plus Fixed - 3 Year Fixed Rate (Special Offer $150k+ LVR <=90% Owner Occupier)
Lock in a special offer rate for 3 years for loans over $150k with LVR below 90%.
3.64% 4.26% $0 $375 p.a. 90% More info
Commonwealth Bank Wealth Package Fixed Home Loan - 2 Year Fixed (Owner Occupier)
Fee free extra repayments available during the fixed term. $1,250 cash back offer for refinancers. Conditions apply.
3.99% 5.00% $0 $395 p.a. 95% More info
St.George Fixed Rate Advantage Package -  2 Year Fixed Rate (Owner Occupier)
A discounted package rate for owner occupiers with the ability to package a Qantas rewards earning Amplify credit card. $1,500 cash back available for refinancers, conditions apply.
3.99% 5.07% $0 $395 p.a. 95% More info
Westpac Fixed Options Home Loan Premier Advantage Package - 2 Years
A low interest rate home loan with a low service fee.
3.99% 4.97% $0 $395 p.a. 95% 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%.
4.08% 4.09% $0 $0 p.a. 95% 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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Related Posts

HSBC Home Value Loan - Resident Owner Occupier only

Enjoy the low variable rate with $0 ongoing fee and borrow up to 90% LVR.

ME Bank Basic Home Loan - LVR <=80% Owner Occupier

A low variable rate loan with no application or ongoing fees.

NAB Choice Package Home Loan - 3 Year Fixed (Owner Occupier)

Receive discounts on interest rates with the Choice Package. 250,000 Velocity Frequent Flyer point offer, conditions apply.

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