Typical Loan Features

There are a lot of features that comes with a home loan. Here are some of them:

Extra Repayments

If you pay more than the required regular repayment, the extra amount is deducted from the principal. This reduces the amount you owe and lowers the amount of interest you repay. Making extra repayments regularly, even small ones, is the best way to pay off your home loan quicker and save on interest charges.

Weekly or Fortnightly Repayments

Instead of a regular monthly repayment, you pay off your home loan weekly or fortnightly. This can suit people who are paid on a weekly or fortnightly basis and will save you money because you end up making more payments in a year, cutting the life of the loan.

Redraw Facility

This allows you to access any extra repayments you have made. Be aware that some lenders charge a redraw fee and have a minimum redraw amount.

Repayment Holiday

If you pay extra into your loan, you can take a complete break from repayments, or make reduced repayments, for an agreed period of time. This can be useful for travel, maternity leave or a career change.  For example, if you pay 3 months of your regular repayments in advance, you could arrange to make lower repayments for the next 6 months.

Offset Account

This is a savings account linked to your home loan. Any money paid into the savings account is deducted from the principal of your home loan before interest is calculated. The more money you put in your offset account, the lower your regular home loan repayments. You can access your savings just like a normal savings account with EFTPOS and ATMs. This is a great way to reduce the interest on your loan.

Another bonus is that if you use the offset account instead of a savings account you won’t have to pay tax on your savings.

Lenders provide partial as well as 100% offset accounts. Be aware that having an offset account may mean your loan has higher monthly fees or requires a minimum balance.

Direct Debit

Your lender automatically draws repayments from a chosen bank account. Apart from ensuring there is enough cash in the account, you don’t have to worry about making repayments.

All-In-One Home Loan

This combines a home loan with a cheque, savings and credit card account. You can have your salary paid into it directly. By keeping cash in the account for as long as possible each month you can reduce the principal and interest charges. Used with discipline, the all-in-one feature gives flexibility and interest savings. Interest rates charged on these loans can be higher.

Professional Package

Home loans over a certain value are offered at a discounted rate, combined with discounted fees on other banking services. These can be attractively priced, but if you don’t use the banking services you may be better off with a basic variable loan.

We’re here to help you

Dealing with banks can be a stressful experience but rest assured that our mortgage broker based in Glenelg (but our mortgage broker services the entire Adelaide Metropolitan area) can help you make the right decision about your mortgage. We will guide you at every stage of your loan process.

Contact us on 08 8376 0455 or drop into our office at 593 Anzac Highway, Glenelg SA 5045.

Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this article is correct as of the date of publication and is subject to change.