Online lender shootout: VS UBank VS State Custodians

Rates and Fees verified correct on March 23rd, 2017
Bob the Case Study Guy

We compare three online, award-winning home loans so you can get closer towards your financial goals.

Discover which online lender could be best for you following the methodology in the case study below.

With a range of great deals currently being offered to Australian borrowers, it’s hard to find a competitive loan with the right mix of features, fees and interest rates - not to mention the amount of choice available between them.

To help narrow down your choices, we’ve made an example scenario with a borrower - Bob - looking to buy a home.

Round 1: The lenders

Bob first wants to know if he can trust the lenders he’s comparing and what type of security they’re backed by. is a privately owned mortgage company underwritten by Firstmac, who has more than $6 billion in mortgages and 32 years of experience offering financial products. They're regulated by almost all of the same credit lending laws, consumer protection acts and privacy acts that other home loan lenders are.

Click here to enquire about the Dream Home Loan.

UBank is an online bank backed by the financial strength of National Australia Bank (NAB). It has the same credit licence as NAB, which means the loans are underwritten by NAB too. Deposits held within UBank are guaranteed under the Government Financial Claims Scheme and UBank adheres to the Code of banking Practice.

Click here to enquire about the UBank UHomeLoan

State Custodians is funded by Resimac Ltd, a company that has been in the industry for 30 years. Its credit rating is considered to be ‘strong’ (the highest category) by one of the world’s most reliable credit rating companies, Standard & Poors.

Click here to enquire about the State Custodians Easy Offset home loan=

Round 2: The rates

After looking at the security and reliability of the three lenders, Bob wants to have a look at how much his total interest repayments will be, based on the following assumptions:

  • Loan amount of $500,000
  • Loan term of 20 years
  • Fortnightly repayments Dream Home LoanUBank UHomeLoanState Custodians Breathe Easy Offset
Interest Rate (%p.a.)4.544.874.72
Comparison Rate (%p.a.)4.564.804.63
Total interest repayments ($)261,297282,850273,012

*Rate correct up to 24 October 2014. Note that this case study does not take into account your personal situation, and other options may be suitable for you.

As displayed above, it seems that the Dream Home Loan is the cheapest option for Bob. Remember that the interest rate isn't the only thing you should look at: you need consider the features as well.

Round 3: The features

Bob looks at some of the most popular features that borrowers normally look for: an offset account, a redraw facility and the option to make additional repayments. If used effectively, these features can actually help Bob save money on his home loan in the long run. Dream Home LoanUBank UHomeLoanState Custodians Breathe Easy Offset
Offset accountYes - 100% offset accountNoYes - 100% offset account
Redraw facilityYes - no minimum, no feesYes - unlimitedYes - unlimited number, $100 minimum online
Additional repaymentsYes - unlimitedYes - unlimitedYes - unlimited as often as you like, no cost
Split rate optionsYes - five free splitsYes - four free splits, min $20K each splitYes - six free splits
Interest-only paymentsYes - up to 10 yearsYes - up to 10 years for investments, up to 5 years for owner occupiersYes - up to 10 years

All of the loans offer many of the same features, without many restrictions, although the UBank UHomeLoan doesn't have an offset account.

Round 4: The fees

Finally, Bob takes a look at the closer fees involved across the three loans. He’s sorted them into fees he’d have to pay, and fees that he may not have to pay for a more realistic interpretation.

Fees you can't avoid Dream Home LoanUBank UHomeLoanState Custodians Breathe Easy Offset
Application Fee$0$0$0
Legal Fee$0$0$0
Valuation Fee$220$0$275
Annual Service Fee$0$0$0
Settlement Fee$300$0$0

Fees you can avoid Dream home loanUBank UHomeLoanState Custodians Breathe Easy Offset
Exit Fee$0$0$300
Early Termination Fee$300$0$0

From the outset, it may look like UBank is the clear winner here, but if Bob compares the amount he saves in fees to the amount of interest he pays, he is presented with a different picture. Dream home loanUBank UHomeLoanState Custodians Breathe Easy Offset
Interest repayments ($)261,297282,850273,012
Fees you can't avoid$520$0$275
Bob is still paying ($)...260,777282,850272,737

The final round

For Bob, it seems that the best home loan for his personal and financial situation is the Dream Home Loan. It offers all the features he needs, and is the cheapest option for him.

Remember that what works for Bob may not necessarily work for you. The purpose of this article is to highlight the factors that you should take into consideration before committing a home loan. What a first home buyer needs in a home loan is different to what an investor would be looking for, so it’s important to keep your needs in mind when doing your own comparison.

The comparison tool lets you compare home loans and mortgage interest rates from different lenders so you don’t miss out on finding a great deal. Start your home loan journey by comparing the thousands of loans featured on

Shirley Liu

Shirley is's publisher for banking and investments. She has completed a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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