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?
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.
An all-in-one product loan account 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 reduce 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. 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
Redraw facilities 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.
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.
Some products have a repayment holiday feature that allows you not to repay during the holiday period. If you plan to go on maternity leave or change your job, this option can be handy.
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.
Lenders Mortgage Insurance
Lenders Mortgage Insurance is a one-off fee paid to ensure any loan where you borrow more than 80% of the property value.
In the unfortunate case you fail to pay your loan, mortgage insurance protects the lender. You, the creditor, are not covered.
If you need mortgage protection, the mortgage consultant will tell you how much it pays. We may be able to arrange the loan so that you don’t have to pay for mortgage insurance at all.
Fixed-Rate Home Loans Vs. Variable Rate Home Loans
Fixed-Rate Home Loans have interest rates and loan repayments that are fixed for a set period of time. A variable rate home loan has an interest rate that fluctuates in accordance with changes in the RBA’s cash rate.