There’s a myriad of home loan features available and finding a home loan with the right set of features can be crucial for achieving your objectives. Below is a list of the common loan features available so that you're in the know when you next to review or get a new home loan.
Home Loan Access Features
|Australia Post access||Pay or withdraw from loan at approved Post Office, pharmacy and/or newsagency outlets.|
|Bpay access||Facility for paying bills directly from the loan account.|
|Credit card||Some home loans are only offered in conjunction with you being auto-approved for a credit card.|
|Credit card auto sweep||Allows your home loan to automatically clear your credit card linked to this loan back to zero each month.|
|Debit card||Debit/ATM card available for loan account access.|
|Direct credit access||Ability to deposit directly to the loan account.|
|Direct debit access||Ability to withdraw directly from the loan account.|
|Internet banking||24/7 online access to your home loan.|
|Offset account||This is a transaction account linked directly to your home loan. The money that you have saved in the offset account is deducted from the balance of your home loan before interest is calculated. Lenders provide partial or 100% offset accounts. The account is great for saving, providing financial flexibility and reducing your tax exposure on these savings.
As a simple example, if your home loan is $500,000 and you have $50,000 in your 100% offset account, you only pay interest on $450,000 for each day that the $50,000 balance is maintained.
|Phone access||Enables you to call up and administer your home loan via telephone.|
|Redraw facility||Gives you the ability to withdraw funds from the home loan if you’ve made extra repayments. Redraw fees or minimum redraw amounts may apply. Similar to an offset account but with different taxation consequences|
|Transaction account||Lender offers transaction account banking in addition to loan products.|
Fee Related Home Loan Features
|Application fees (Low or no)||Lender application fees, valuation fees, settlement fees and any other fees that may apply when establishing a home loan.|
|Break fees (Low or no)||Break costs may apply if your fixed home loan balance is significantly reduced or paid out in full before the contracted period ends.|
|Exit fees (Low or no)||Discharge fees and any other fees associated with the ending of the home loan.|
|Lenders Mortgage Insurance (LMI) Available||Lenders Mortgage Insurance may be payable depending on your loan to value ratio.|
|LMI Capitalisation||The ability for the Lenders Mortgage Insurance (LMI) premium to be added on top of your home loan.|
|Ongoing fees (Low or no)||Ongoing monthly or annual fees may apply for the duration of the home loan.|
Purpose Related Home Loan Features
|Bridging||Enables the home loan to be used for bridging finance purposes.|
|Cash out / top up||Access cash by drawing upon existing or built up equity in your property. Handy for those needing funds to renovate.|
|Construction||Enables the home loan to be used for construction purposes.|
|Rate Lock||Ability to secure a fixed interest rate against any rises, which may occur prior to the settlement of your home loan.|
Repayment Related Home Loan Features
|Extra repayments||Make larger repayments than your contracted minimum repayments in order to save interest and repay the loan earlier. Be aware that the majority of fixed rate home loans will limit the amount of extra payments you can make each year.|
|Interest only||This option enables you to pay only the interest on your home loan without making any principal repayments. Lenders typically offer interest only periods for up to 5 years. Great for reducing your repayments in the short term, in the long term it can mean you paying more as you’re paying interest on a principal that isn’t reducing.|
|Repayment frequency||The ability to set whether you make your repayments on a weekly, fortnightly or monthly basis. Weekly or fortnightly repayments can lead to you paying off your mortgage sooner as you’ll make more repayments during the year.|
|Repayment holiday / Capitalising of interest||Offers a complete or partial holiday from repayments for a period of time. This can be invaluable if you have a sudden change in your circumstances such as losing your job or becoming a parent. It’s important to remember that interest still accrues on your home loan during this period and that you must have sufficient equity in your property.|
|Salary direct repayments||Have all or part of your income paid directly into your home loan account, which is beneficial if you’re not a disciplined saver.|
Structure Related Home Loan Features
|Company / trustee as borrower||Ability to have the home loan written in the name of a company or trustee.|
|Family pledge / guarantor||Allows a family member to guarantee a specific amount of your home loan. This guarantee is supported by a mortgage over the family member's property and allows you to borrow up to 100 per cent of the purchase price plus purchase costs. Great for those struggling to save a deposit and to avoid LMI but generates risk for the family member providing the guarantee.|
|Portability||Allows you to transfer your existing loan from one property to another without rewriting the loan from scratch. This can save you from paying any break costs for your old loan or establishment fees on your new loan|
|Split rate||The ability to split your home loan into more than one facility. Typically enabling you to have a mixture of fixed and variable repayments with some lenders allowing up to 6 splits.|
Features like redraw, offset and line of credit can be useful but they may come at a cost. Loans with these features may have a higher interest rate or a product fee, so think carefully about which features you really need.
Want to talk more about your home loan options?
If yes, then please get in touch with me today and I'll be happy to help. All my home loan and mortgage services (from the initial meeting, right through to home loan settlement) are completely free to you.