Home Loan Features
When choosing a home loan, the interest rate is not the only consideration; other features associated with your loan can also be important. Below are examples of features you may come across when you take on a home loan.
A redraw facility allows you to access additional funds paid into your home loan if you need extra money, up to the amount of the additional repayments. This feature is generally not available with fixed-rate home loans.
This facility allows you to make extra repayments on your home loan, effectively reducing the interest charged and the length of the loan term. Some lenders may limit the total additional amount you can repay within a given period, and additional repayments may not be available or may be capped with fixed-rate home loans.
Many lenders offer either full or partial repayment holidays for specified periods of time. During this time, you don’t have to make home loan repayments, however you will generally still accrue interest on your home loan balance. You may need to make additional payments in advance, or a lump sum repayment on return, or increase your home loan repayments to access this feature.
Save money with the right home loan features
Knowing which features suit your situation, and knowing how to use them correctly, can save you thousands of dollars over term of your home loan. Your Loan Market mortgage broker will set up your loan to take advantage of the features that are in your best interest. Fill out the form below or call us at any time on 0508 722 205 (+64 9 526 0122).
Find Out About Your Home Loan Options
Home loan Offset Account/Salary Credit
An offset account is a savings account which is attached to your home loan account.
It works by either:
- Subtracting your account balance from your outstanding home loan principal when calculating the daily interest charges. For example, if you have a $300,000 mortgage and $20,000 in your offset savings account, you will only be charged interest on $280,000 even though your “loan balance” is $300,000; OR
- Applying the interest earned on your account to your home loan balance. From a taxation perspective, interest paid to your savings account is taxable, but the same interest used to offset home loan interest is not, so you effectively save tax and reduce your home loan at the same time.
Look for lenders who offer 100% offset. Also note that some lenders require a minimum balance to be in your account before offset applies. Your Loan Market mortgage broker will ensure you maximise your savings with the right account set-up.
Salary credit works in a similar way to offset, by allowing you to pay your salary directly into your home loan account. You then redraw funds as you need them to pay day-to-day expenses. With interest calculated daily, this effectively reduces the principal amount owing for the time your salary is in the account, thereby reducing the amount of interest paid.
Loan portability allows you to transfer your existing home loan from your current property to a new property, without the need to refinance. This can save you money on application and legal fees.
Get the right home loan features
To find out how you can save money using the right home loan features, or the home loan that is in your best interest, talk to your local mortgage broker or call us at any time on 0508 722 205 (+64 9 526 0122).