HOME LOAN FEATURES
What are the features in a home loan, and what do they do?
Most of the lenders do have home loans from basic products to packaged products that include many features. But some do come with an annual package fee. Some have interest rate discounts with the package and no fees….
Here are a few examples of some of the features our lenders provide –
Offset accounts are a great feature to have on your loan, particularly useful if you have a good portion of funds you still would like to be able to access, but will be sitting around in a savings account doing nothing.
AN offset account offsets the funds you have in the account against the balance of your home loan. You do not receive any interest from the funds in the account, but when your interest payable is calculated, the lender takes the balance of the offset account away from the balance of the home loan, and that is the amount that you will be charged interest on. So if you have a $200,000 loan, and have $50,000 in your offset account, you will only be paying interest on $150,000. So say if your home loan is at 5%, you would be saving 5% interest of $50,000 on your home loan. Much more interest than would be given by the banks on even a term deposit account. And you can still access your funds!!
100% offset accounts offset from just $1 in the account, so many people use their offset accounts as their everyday operating accounts, with interest calculated daily and charged monthly, every dollar can help. But of course to get the best result from an offset account, is when you have larger sums in the account.
With fixed rate loans very few lenders offer offset accounts. But there are some who do. As with all offset accounts, the more cash you have in them, the better the result is on saving money on interest. Of course a “Line of Credit” does not have an offset account either. Most lenders “package” loans offer an offset account.
Redraw is more or less as it sounds. If you pay extra off your home loan than your standard repayments, with a redraw facility as part of your loan this enables you to draw on the extra funds you have in your loan, thus a “redraw” facility. Some lenders it is simple as just transferring from one account to another using internet banking. Some lenders may take overnight to redraw the funds, some may have a minimum amount that you can “Redraw”, some may even charge you a fee for redrawing your available funds.
Most lenders offer special packages which can be an advantage to you if you can make the most use of them. These packages normally have an annual fee (up to $400 per year), and all seem to have similar features, but all vary from lender to lender. Also you would have to have a minimum loan amount of $150,000 to qualify for the package deal. Here are just some the features offered-
With most lenders packages, they offer no fees if you are part of the “package”. No monthly account keeping fees, no application fees, no valuation fees, and options to change your type of loan without a fee for doing so. Remember though you are paying an annual fee, so “No Fees” is not quite true.
Most will come with a credit card with no annual fee. If you use a credit card this may suit you as you can change your credit card to the lenders and save on that annual fee. The lenders of course hope you use the credit card and then have to pay the interest on the card as well as your loan. Using the interest free period on a credit card could save you from doing this.
Most packages allow you to have multiple split loans, with no monthly account keeping fees. Some “Basic” products do allow you to have one split, but then may charge you for any others. Having multiple accounts can help you to separate different loans for different purposes and also split fixed and variable portions of your loan so you can have the best of both worlds.
Interest Rate Discounts
With these packages lenders offer interest rate discounts against the standard variable rate offered. This will all depend on the amount you are borrowing and the LVR (Loan to Value Ratio). Generally the more you borrow and the more equity you have in your property the cheaper the rate that is offered. If you check the basic products of some lenders, you will find that some rates on their basic products are quite close or the same as the rates offered on their “packages”, but with no annual fee.
A loan’s “Portability” means as it says, the ability to take it from place to place, property to property. So if you sell your property, you can take your loan to the new property, so avoiding having to go through the complete application process, and paying off your loan in the same time. Particularly good if you really like your type of loan or if your circumstances change. You do not have to supply payslips or tax returns if you take a portable loan from one property to another. This is assuming a good repayment record.
Well there are some of the features that can be found in most lender’s home loans. All are slightly different in what they offer, the interest rates and fees they charge, and various rules relating to extra repayments.
Now really do YOU want to sort through 40 lenders to get the one that is right for you? Do the smart thing and contact us here at Fraser Financial Services! We know what the lenders have to offer and what you need to get your home loan approved. We take the worry out of looking for finance so you can keep doing what you do best.
– IT’S WHAT WE DO!!
Fraser Financial Services (Qld) Pty Ltd
Ph – 07 55 766 299 Mobile – 0400 853 035