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Home Loan Features

To repay your mortgage at a quicker rate therefore reducing the amount of money you spend on a loan, you need to choose the right home loan features and also secure a good interest rate. You will find that a more flexible loan will mean a higher interest rate, which will increase your interest repayments. For example, someone who chooses a variable loan with a variety of features including redraw against additional payments or offsetting your savings will typically attract a higher interest rate than that of a basic loan.

However, if flexibility in a loan is what suits your financial situation, this type of loan will reap more benefits for you. The below terms will be explained to you, allowing you to get a better understanding of what features and options are suited to your needs.

Offset accounts

An offset account is an account or loan split that that is connected to your loan and reduces the interest on your loan account. The funds can then be used to offset your loan and reduce the amount of interest paid. It is especially convenient for those with loans from financial institutions that they bank with, and those who are paid on a monthly basis.

Additional repayments

If you think you will have access to additional cash or income, you should ensure that your home loan has an additional repayments feature. This will allow you to use any extra cash to lower your principal which will also reduce the interest paid. Most lenders will allow you to withdraw those extra payments through a redraw facility.

Loan portability

A Portable loan means that you can transfer an existing loan to another property without refinancing, saving you time and money on application and legal fees. However, portability does not permit you to change lenders.

Redraw facility

Redraw facilities allow you to make extra repayments on your loan, and also to access these funds without any explanations to your lender. However, some lenders charge a fee for every redraw and also sets a minimum redraw amount.

Professional packages

Professional packages are loan 'bundles' offering borrowers discounts on interest rates, ongoing fees, and reduced application and establishment fees, subject to loan size.

Interest only loans

Interest only loans tend to be short term loans ranging from one to five years and are often used by investors. On these loans only the interest portion of the loan is repaid with the principal remaining unchanged during the ‘interest only’ term.

Top up

A loan top up allows the borrower to increase the limit on their existing loan, without having to acquire additional finance through other sources.

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