Basic Home Loans
are light on features but offer a low interest rate and no or lower fees. These “No Frills” home loans are useful for borrowers who are looking for lower regular repayments and minimum ongoing costs. These are useful for first home buyers who won’t be in a position to accumulate substantial savings or buyers who don’t want to pay for features they won’t use.
Package Home Loans
usually combine the home loan with other commonly used financial products, for example, bundling an offset account and/or a credit card together, with the loan generally at a lower discounted interest rate compared to the standard variable or standard fixed rates.
The package usually includes a mortgage offset transaction saving account in addition to a redraw facility on variable rate loans. This type of home loan is useful for borrowers who believe their savings pattern or cash flow will assist in reducing their monthly loan interest cost and ultimately pay the loan off faster. A package loan will usually have an annual fee that covers all facilities within the package.
While the basic home loan is commonly a variable interest rate loan, a package home loan may offer a combination of variable and fixed interest rates. The features and restrictions of the different rate types should be taken into consideration when selecting your home loan.
Determining whether a basic or a package loan with offset accounts will suit you best, is best done once your current and longer-term financial plans and requirements have been unpacked and discussed.
Reach out for a conversation about what will suit you best.
Glossary of terms
Offset account: an account linked to your home loan that operates like a transaction or savings account. It offsets the balance in that account against the balance of your home loan, so you’ll only be charged interest on the difference.
Redraw facility: lets you access additional repayments you’ve made on your home loan over and above the minimum required repayments.
