When you start your home loan hunt, the bells and whistles aren’t the main thing you think about, but there several options or features which could save you money.
In this article, we'll run you through some of the options to put on your home loan shopping list when you are looking for the right home loan for you.
One of the more frequently requested options is the ability to make additional repayments on your mortgage without being charged. This allows you to pay down your home loan faster and can save you a considerable amount of money over the life of the loan.
Whilst most variable loans have this as part of their default settings, many financial lenders offer fixed rate products with this feature as well. If it is important to you, ask your mortgage broker and they will make sure it is part of their recommendations.
If you've made additional financial payments on your home loan, you may wish to access those funds. A redraw facility allows you to do this simply and without fuss. Many people look at their redraw facility as an extra emergency fund while others use it to upgrade the kitchen or build a new deck on their property.
An alternative to the redraw, is an offset account. Basically, you put your savings in the offset and then, when the bank is calculating interest, it considers the amount in the offset account as having been paid to the mortgage. Interest is therefore not paid on the amount, or is not paid on a portion of the amount, in the offset account depending on your lender and the product you choose. Mortgages with offset accounts can have higher interest rates or a higher annual fee so it is important to carefully consider if you will use it and whether it will actually save you money.
This is the bank’s way of getting you to choose them over the competition. Essentially, they give you a reduced rate for a period (usually 1 – 3 years), before it reverts to a higher variable rate. If you intend to keep the property long term and are unlikely to refinance for several years, it is important to run the numbers and ensure that the lower introductory rate isn’t cancelled out by the higher variable rate later on. Used correctly, you can save money with an introductory rate.
At the end of the day, these features are all optional. If all you want is a straightforward home loan with a low interest rate, then that is what you should tell your mortgage broker.
At Preston Finance, in Cairns we can help you find home loan to suit all of your needs. Contact us today on 4052 0750