Similar to a low interest rate, some home loan features have the ability to save you a significant amount of money throughout the loan term. Therefore, if you are looking to refinance, it is important to look at the home loan features and compare these features in light of your own goals and situation.
Free redraw gives you the freedom that you need to keep the bulk of your ‘savings’ in your home loan and still be able to access it when you need it.
An offset account may be a bank account or a credit portion of a loan. The positive balance in the offset account reduces the amount of interest to be paid on the loan.
– Full offset
If it is a partial offset account it only offsets a portion of the interest payable in the loan on the same amount of money. So, for example, if the offset account gives a credit of 4% interest and the interest on the loan is 6%, then only 2% interest is payable on the part of the loan that is equal to the balance in the offset account.
– Transaction account
Some offset accounts have limited transaction ability. There may be a minimum amount for deposits and withdrawals and limited ways in which funds can be moved in or out of the account. You will pay lower interest on your loan for every day that a dollar is in your offset account So having more flexibility will allow you to leave it there longer.
BPay in and out
It’s great to have your list of utility providers and companies that you make regular payments to in a list in your personalised and secure loan website. When a bill arrives, you enter it for payment. If you are one of those who want to save every dollar of interest possible, you schedule it for payment at about the time it is due.
You can also use BPay to pay money into your loan with some loans. When you want to transfer money from any bank account into your loan, you can use the BPay features associated with that bank account to BPay funds into your loan account.
Attached credit card or debit card
A debit card attached to your loan or offset account is usually one of the methods of accessing your redraw via ATM’s and EFTPOS. A credit card on the other hand can be linked to the loan and builds up an amount owing which can be setup to be auto paid at the end of the interest free period. Payment of the balance will come out of funds in redraw or the offset account.
Occasionally there is a need for some people to write cheques. Again, it’s just another means of transacting with your loan account, making it more practical.
Many utilities bills can be set up to be automatically paid from an account that you specify. Your loan could be that account if it has this feature.
Direct salary crediting
By having your employer pay your wages directly into your loan or offset account, you immediately have the credit for that money in your account, and it reduces the amount of interest that you have to pay every day until it gets paid out for one thing or another.
Most loans should have daily compounding. It means that the interest on the loan is calculated daily. That would be better than being charged interest on the maximum amount owing over a period of time.
While your interest is calculated daily, it only shows up in your loan at the end of the month. That means that you don’t have to pay interest on the interest during the month.
Internet banking allows you to check your balances, pay bills and make transfers 24/7.
This can be a significant benefit for people who do not have internet access.
A number of strategies are made possible by being able to split your loan into multiple portions. Each portion has its interest calculated separately, and transfers can be made between the portions. This is vital in managing investment debt, and it can be used to allow having fixed interest on a portion of the loan.
Line of credit
A line of credit is very similar to an interest only loan. The biggest difference is that the line of credit is based around a limit. Money goes in and out, but the limit stays the same during this period of operation. Interest is only paid on the amount of funds drawn down so is useful for renovations and investing.
Fixed interest portion
Whether it’s only certain times that you want to have a portion of your loan with fixed interest, or it’s all the time, it certainly is good to have the ability to do so.
Bonus rate drop
It’s a discount on your interest rate after a given number of years.
Unlimited extra repayments
Ensure that your loan will allow you to set up a loan with larger than normal regular repayments or one-off extra repayments.
Fee free redraw
Given that you are paying every spare dollar that you have into your loan, you need access to those extra payments. You don’t want to be paying a fee of $20 to $50 every time you need to use those funds. Fee free access to your own funds is a very important feature to be saving the maximum in interest on your loan.
You may experience a situation where you are going to sell a home and purchase another at the same time. Portability makes it possible for you to keep your existing loan, possibly adjust the loan amount, and simply swap which property is securing the loan.
Top ups available
If you need the funds to replace your car or update your kitchen, a simple increase to your home loan may be a good option if you have sufficient equity.
State Custodians Home Loans for Home Refinance
One of the most common loans used to refinance an existing loan is the Standard Variable Offset Home Loan. It has very attractive interest rates and award winning features. Click on the link for details. Should you have a smaller loan, a Breathe Easy Offset Home Loan might be best for you. It has no upfront or ongoing regular fees, but a slightly higher interest rate. Both have the same features when it comes to function. Give us a call and we will help you work out which is best in your situation.