Loan Features to consider
There are many different products and features to consider when choosing a home loan. Do you want a cheaper rate? Do you want the flexibility of making additional repayments with no penalty? Or would you like to use your savings to offset your interest repayments? Whatever your needs, First Choice Mortgage Brokers are here to assist you.
100% offset home loan
A 100% offset home loan is a home loan that comes with a linked bank account called an offset account. This offset account functions very similar to a normal savings account but with one main difference, any savings you have in the account reduces the amount of interest you pay on the linked home loan. Also you may or not be aware that savings interest earned on your accounts is taxable, if you put your savings in your home loan offset account instead, you will be reducing your home loan interest and reducing your tax bill at the same time.
All in one product
This is a loan account that combines your mortgage, savings and cheque account into one. You deposit your income into your mortgage account and the additional funds in your account then reduces your home loan balance and therefore the amount of interest you are charged per month.
You will often have a credit card attached to your all in one account which you will use for your daily expenses for example food, petrol and bills and the outstanding balance is drawn down at the end of the month from your home loan account before the interest free period on the credit card ends.
Usually professional packages are offered to clients with a higher loan amount as the interest rate discounts will only benefit those with higher borrowings. Packages can also include bonus income on savings accounts and free credit cards as part of the offer.
Typically the lenders require you to bundle all of your personal banking into the one package to offer you more savings. Most of these packages include all in one or offset account facilities as a standard.
Direct salary credit
Your employer pays your salary straight into your home loan account on your behalf – this can benefit you if you are not a good saver
Allows you to draw on any additional home loan repayments you have made in addition to your interest repayments. You can access this money for any purpose you like and you don’t have to apply for new funds through your bank. Some products will charge you a redraw fee for access the funds which can vary from lender to lender.
Some products have a repayment holiday feature which allows you to not make a repayment during the holiday period. If you are planning to go on maternity leave or changing your job this option can be very useful.
Fixed rate switch
Allows you to switch from a variable interest rate which can change when the rates decrease or increase to a fixed interest rate which is locked in at a specific rate for a period of time.