How to get the edge at auctions

How to get the edge at auctions

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 May 23rd, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.69%
3.69%
$0
$0 p.a.
80%
Refinance to a UBank loan and you could get $1,000 in your USaver account (offer conditions apply). Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
3.64%
3.67%
$0
$0 p.a.
80%
A mortgage with a competitive variable rate, limited fees and plenty of flexibility.
3.69%
3.69%
$0
$0 p.a.
70%
Pay no application or ongoing fees and get a flexible loan with the ability to split up to 6 times.
3.64%
4.03%
$0
$395 p.a.
80%
New borrowers or refinancers from another lender get a discounted rate with this package loan.
3.54%
3.58%
$0
$0 p.a.
80%
Eligible borrowers can get $900 cashback on this loan with a 100% offset account and a redraw facility.
3.64%
3.84%
$0
$0 p.a.
70%
Enjoy all the benefits of the Basic Home Loan and take advantage of an offset account.
3.68%
3.83%
$0
$10 monthly ($120 p.a.)
80%
Get a 100% offset account to save on interest charges, and pay no application fee.
3.69%
3.71%
$0
$0 p.a.
80%
A low rate variable home loan offer with no monthly fees or application fee charge.
3.96%
3.98%
$350
$0 p.a.
90%
For a limited time, pay no application or settlement fees. You can also take advantage of a free redraw facility.
3.70%
4.13%
$0
$395 p.a.
90%
Package your loan with an eligible credit card for discounts on rates and fees, and get a 100% offset account.
3.79%
3.79%
$0
$0 p.a.
80%
Pay no application and ongoing fees with Macquarie Bank Basic Home Loan.
3.52%
3.53%
$0
$0 p.a.
80%
Go from application to approval in as little as 20 minutes with a variable rate loan from this innovative online lender. Add a 100% offset account for $10 a month.
3.79%
4.06%
$0
$20 monthly ($240 p.a.)
80%
Add a Platinum Rewards Mastercard with this package loan and you could earn 150,000 Bendigo reward points (Victoria only, terms and conditions apply).
3.69%
4.06%
$0
$349 p.a.
90%
Package your loan with other AMP products and save on rates and fees.
3.69%
4.86%
$0
$395 p.a.
90%
Start your home buying journey with 2 years of fixed repayments and a reasonable rate from a big 4 bank. Available with a 10% deposit.
3.77%
3.81%
$200
$0 p.a.
95%
A simplified mortgage with a low interest rate and a redraw facility.
3.68%
3.69%
$0
$0 p.a.
95%
This variable rate loan offers flexible repayments and a redraw facility. Available with a 5% deposit.
3.69%
3.73%
$600
$0 p.a.
95%
Variable rate home loan from one of the big 4 banks. Available with just a 5% deposit.
3.58%
3.58%
$0
$0 p.a.
70%
A low interest rate home loan with no application or ongoing fees.
3.68%
3.69%
$0
$0 p.a.
90%
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000.
3.87%
3.87%
$0
$10 monthly ($120 p.a.)
90%
Get Virgin Velocity Points at settlement, monthly and every three years, plus the option to make up to $10,000 a year in extra repayments.
3.69%
3.74%
$600
$0 p.a.
80%
A competitive variable rate for borrowers with a 20% deposit or more. Guarantor option available.
3.69%
4.04%
$0
$350 p.a.
95%
A competitive rate with no application fee.
3.69%
4.11%
$0
$395 p.a.
80%
Save on interest with a 100% offset account and save on other ME products with this package loan.
3.65%
3.66%
$0
$0 p.a.
80%
This special rate loan comes with no application or ongoing fees, and offers a flexible repayment schedule.
3.69%
3.94%
$0
$248 p.a.
70%
Get a sharp rate and a 100% offset account. Borrowers must have a 30% deposit.
3.62%
3.62%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Refinance to a UBank loan and you could get $1,000 in your USaver account (offer conditions apply).
3.73%
3.73%
$0
$0 p.a.
80%
Get a 100% offset account and pay no application or ongoing fees on this special variable rate for owner-occupiers.
3.79%
3.83%
$600
$0 p.a.
80%
A low interest rate loan with limited fees and a redraw facility. Principal and interest repayments only.
3.74%
3.74%
$0
$0 p.a.
110%
Pay no deposit or LMI and get a discounted rate with this family pledge loan. Requires a family member to act as guarantor. NSW, Qld and ACT only.
3.78%
3.78%
$0
$0 p.a.
80%
Pay no application or ongoing fees and get access to a free redraw facility with this innovative online lender.
3.89%
3.89%
$0
$0 p.a.
70%
Investors with a 30% deposit can get this low rate property investment loan.
3.90%
4.78%
$600
$0 p.a.
95%
A competitive fixed rate mortgage with split facilities and extra repayments. You can get this loan with a 5% deposit.
3.99%
5.17%
$600
$0 p.a.
90%
Competitive rates for fixed for 3 years with redraw facility.
3.74%
3.74%
$0
$0 p.a.
90%
New customers can get a discounted variable rate and a fee-free redraw facility. NSW, QLD and ACT residents only.
4.09%
4.12%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and get flexible repayment options and a redraw facility.
3.59%
4.14%
$395
$0 p.a.
80%
A one year fixed rate offer with no ongoing bank fees.
4.14%
4.14%
$0
$0 p.a.
80%
Investors pay no application or ongoing fees on this loan from an innovative online lender.
3.74%
4.01%
$395
$0 p.a.
80%
A competitive 3 year fixed rate with no ongoing bank fees.
3.88%
4.89%
$0
$395 p.a.
95%
Low deposit home loan. Enjoy flexible repayment options while paying limited fees.
3.99%
4.62%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
3.99%
4.86%
$0
$0 p.a.
80%
Access a fee-free 100% offset account and pay no application or ongoing fees.
3.89%
4.87%
$0
$0 p.a.
90%
Borrow up to 90% of the value of the property you're buying and pay no application or ongoing fees.
3.64%
3.64%
$0
$0 p.a.
70%
Get a discount for keeping your LVR at 70% or below with this innovative online lender.
3.85%
4.05%
$0
$350 p.a.
95%
This high LVR fixed rate loan allows you to borrow up to 95% of the value of the property you're buying.
4.09%
4.11%
$0
$0 p.a.
80%
This variable rate loan keeps the features simple and fees low. This loan is offered by a 100% online lender.
3.99%
3.99%
$0
$0 p.a.
80%
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required. Refinance to a UBank loan and you could get $1,000 in your USaver account (offer conditions apply).
3.69%
4.47%
$0
$395 p.a.
90%
A fixed rate loan with a 100% offset account and the option to make additional repayments. Loans over $150k receive a discounted rate. NSW, QLD and ACT residents only.
3.85%
4.82%
$600
$35 monthly ($420 p.a.)
90%
Make up to $10,000 in extra repayments per year and take advantage of a flexible repayment schedule.
3.79%
3.80%
$0
$0 p.a.
70%
Keep your LVR at 70% or below and enjoy a special discounted rate. Also, pay no application or ongoing fees.
3.99%
4.03%
$0
$0 p.a.
95%
Buy a home with just a 5% deposit and pay no application or ongoing fees.
3.89%
4.96%
$0
$395 p.a.
95%
Refinancers can get $1,500 cashback. Conditions apply. Package your home loan with a Qantas rewards earning Amplify credit card.
3.89%
4.97%
$0
$395 p.a.
95%
Get discounts on a range of Commonwealth Bank products and enjoy the option of fee-free extra repayments during the fixed term.
4.09%
3.79%
$0
$0 p.a.
70%
A competitive 3-year fixed rate loan with a high max insured LVR.
3.64%
3.65%
$0
$0 p.a.
95%
Family pledge option available. Get a special discount off Bank of Melbourne's basic variable rate.

Compare up to 4 providers

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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Home Loan Offers

Important Information*
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I) First Home Buyer Special

Start your home buying journey with 2 years of fixed repayments and a reasonable rate from a big 4 bank. Available with a 10% deposit.

UBank UHomeLoan Variable Rate - Discount Offer for Owner Occupied Variable P&I Rate — borrowing $700,000 or more

Pay no application or ongoing fees and get access to a redraw facility and flexible repayment schedule. Refinance to a UBank loan and you could get $1,000 in your USaver account (offer conditions apply).

Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤90% ($150K+ Owner Occupier)

Loans over $150k get a discount off an already low fixed rate. Available for NSW, Qld and ACT residents only.

Newcastle Permanent Building Society Premium Plus Package Home Loan - New Customer Offer ($150,000+ Owner Occupier, P&I)

New borrowers or refinancers from another lender get a discounted rate with this package loan.

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