NAB Home Loans

NAB is one of Australia’s largest home loan borrowers, behind more than $300 billion worth of residential mortgages for both owner occupiers and investors. That’s almost 15% of the nation’s home loans. However, NAB’s home loan interest rates are often higher than the market’s most competitive, according to an InfoChoice market review. 

Who does NAB lend to?

NAB lends to the majority of the home buyers or owners, including owner-occupiers, investors, refinancers, first home buyers, self-employed borrowers, and people constructing a home.

NAB may provide fixed rate or variable rate home loans to borrowers buying houses with deposits as small as 5% without a guarantor. However, the interest rates it offers are tiered, allowing homeowners with lower loan-to-value ratios (LVR) access to lower rates. It will also likely ask those looking to borrow with an LVR of over 80% to pay lenders mortgage insurance (LMI). 

The bank will allow owner occupiers boasting a LVR of under 80% to make interest only repayments on their home loan. Those borrowing a greater portion of a property’s value will need to make principal and interest repayments. Investors can borrow with an LVR of under 90%, making either principal and interest or interest only repayments.

First home buyers

NAB is one of 30-plus lenders that participate in the Home Guarantee Scheme. The scheme actually encompasses three guarantees: The First Home Guarantee, the Regional First Home Buyer Guarantee, and the Family Home Guarantee. 

It allows a select number of eligible buyers to enter the market with a deposit as low as 2% without paying LMI.

Does NAB charge LMI?

Have a deposit of less than 20%, can’t or don’t want to access a Home Guarantee Scheme, and don’t have a guarantor? It’s likely that you’ll have to pay LMI when taking out a home loan like those offered by NAB. NAB’s LMI provider is QBE Insurance.

However, NAB offers a 5% discount on LMI to certain borrowers buying a ‘sustainable’ home (one with a 7-star NatHERS rating or a Green Star Home accreditation). 

Self-employed borrowers

NAB provides home loans to business owners and sole traders, and has a team of business experts on the line to help such customers. 

The bank will consider a self-employed borrower’s income, the length of time they’ve been trading, and other factors when assessing their ability to sign on for a home loan.

Refinancing

NAB also provides home loans for those refinancing from a different bank or to a different mortgage product. 

Taking the time to contemplate whether your home loan still suits you, your lifestyle, and your financial position on a regular basis could prove incredibly worthwhile.

‘Green’ home loans

NAB might offer discounted home loan interest rates to those who own or hope to own a ‘green’ or sustainable house. 

Borrowers with a deposit of less than 20% could see themselves receiving a discount of up to 1% per annum on the bank’s base variable lending rate and a 5% discount on LMI if they’re buying an energy efficient home. 

Offsets, redraws, and other benefits

NAB offers a range of common benefits with its home loans products. 

For instance, its tailored valuable package can provide a borrower with an offset account, allowing them to reduce the interest portion of their repayments by storing extra cash in the account. 

It also allows borrowers to split their home loans into a fixed interest portion and a variable rate portion, potentially realising the best of both worlds. 

The bank allows homeowners to ‘pay ahead’ up to $20,000 on its tailored fixed rate home loans, which offer terms of one to five years, without a fee. Those signing onto its variable rate products, on the other hand, can make as many additional repayments as they would like. They can also redraw a minimum of $500 of their extra repayments whenever they would like.

Fees

The bank charges a $600 application fee for its basic variable rate home loan, though that can sometimes be waived. Meanwhile, its two ‘tailored’ packages don’t demand an application fee, but do charge an ongoing $8 monthly fee.

The bank may also charge a fee if a fixed rate borrower pays more than $20,000 of additional repayments during their fixed rate period.

Finally, NAB will charge a fee to ‘lock in' an advertised rate when a homebuyer is applying for their loan. ‘Rate lock’ is valid for up to 90 days and is charged at 0.15% of the loan amount, rounded to the nearest $10.

Can I pay off my NAB home loan early?

Borrowers with a fixed rate home loan will likely face extra charges if they pay their home loan off earlier than anticipated. That’s largely because a bank will generally borrow the money it loans to a fixed rate borrower, and if that borrower pays their loan back early, the bank could end up footing extra costs. How much the bank might charge a borrower in such a circumstance will likely depend on its potential losses. 

However, those with a variable rate home loan can make as many extra repayments as they’d like, thereby potentially repaying their mortgage back early without fees. 

NAB home loan pre-approval

If you’re in the market for a new home, it’s probably worthwhile seeking home loan pre-approval, which NAB calls conditional approval.

Would-be borrowers will typically apply for conditional approval prior to finding their dream home. When they do, they’ll likely ask the bank for unconditional approval for a home loan.

NAB executive of personal everyday banking Paul Riley told InfoChoice the bank can often offer unconditional home loan approval within an hour of a home owner or buyer submitting their application.