Like other packaged home loan products, the NAB Choice Package Loan requires you to take out, or already have, additional products with the bank as part of the loan agreement in return for a number of discounts and fee waivers.
This is typical of most packaged loans, in that they will generally include a discounted interest rate and/or lower fees as an incentive to take the package.
In the case of the NAB Choice Package Loan, your home loan, credit card and eligible insurance products are bundled to reduce your fees and enable you to receive preferential interest rate discounts on a range of the bank’s mortgage products.
This package is designed with flexibility in mind and is available to investors, owner-occupiers, first home buyers and refinancers. The discounts differ depending on how large your home loan is, with the largest savings typically going to those who borrow the most.
NAB points to its Choice Package Loan as a way of saving money. If you do find you are saving money, this money can be all the more valuable if you are prudent enough to use them to make extra repayments and reduce the principal owed on your mortgage at a faster rate.
In addition, the NAB Choice Package Loan offers a range of features, linked to the specific mortgage you have chosen, such as a 100 per cent offset account, a redraw facility and exemption from a number of mortgage fees and charges. These features can be used to decrease significantly the amount of interest paid over the life of your loan.
NAB Choice Package Loan is only available in connection with a selection of NAB’s home loans. More specific product information is available here.
A review of the highlights
If you are already with NAB and currently have a couple of other financial products with the bank, namely a credit card and an insurance policy, you could benefit from bundling a new home loan in with your existing products. On the credit card side, while you hold a NAB Choice Package Loan the bank will waive the annual card fee on each eligible NAB Credit Card included in your name. The bank also says that with the package you can be offered an NAB credit card of your choice.
Looking at benefits on insurance, with the NAB Choice Package Loan you will receive 12 months insurance for the price of 11 months at the standard premiums applicable to new applications for eligible NAB Home Insurance, NAB Home Insurance Essentials and NAB Residential Investor Insurance policies. This could be an attractive feature if you have already decided to take out these insurance products.
However, the discount you receive off your mortgage interest rate is likely to be the biggest windfall – a welcome reward to customers who show their loyalty to the bank. The size of the interest rate discount will depend on which loan you take out and how much you borrow and are available on NAB’s variable rate, standard fixed rate and standard Flexiplus Mortgage rate loans.
Having a package deal with NAB comes with other advantages if you’re someone who likes banking with a mainstream lender. Those who want to manage their financial affairs from the comfort of their office or home can use NAB’s all-inclusive internet banking platform where you can set up regular payments and formulate budgeting plans.
Another plus could be if you are a big user of your credit card and already pay a high annual fee for rewards. In this situation it could make sense for you to bundle your home loan and credit card fees, resulting in a potentially wise money-saving choice.
A review of the lowlights
The NAB Choice Package Loan won’t be for all customers in the home loan market. If a low interest rate is your main priority in a loan, then there could be other lenders out there who offering more competitive rates. Even with the discounts available for bundling your loan with NAB, it is unlikely that it will match the lowest rates on the market.
This could be especially pertinent to take into account if you are planning on paying your loan off over the maximum loan term. In this situation looking for a lower interest rate is usually a good strategy.
The annual fee for the NAB Choice Package Loan could also be a drawback. Like many other packaged home loan products, The NAB Choice Package Loan reduces some of the fees and charges that are usually linked to a home loan, for instance loan application fees and monthly service fees, and transfers them all into one annual payment. The question is whether this trade-off is worth it.
Given the NAB Choice Package Loan comes with a high annual fee, the best way to assess the value offered by a package could be to refer to the loan’s comparison interest rate which takes into account the regular interest rate, most upfront fees plus the annual package fee. Looked at this way, the rate discount offered by the lender in the package can sometime not appear so generous.
While packaged loans like the NAB Choice Package Loan can be worthwhile, you should work out whether you actually need the extra products and what the ongoing costs of having them are versus the savings you stand to make by bundling.
It may end up cheaper to go with a lender that offers a similar rate without as many strings attached, but equally in your particular situation a package deal could make financial sense.
For those who already have an insurance policy with the bank or are big credit card spenders, it could very well make sense to bundle up your home loan with NAB to take advantage of the interest rate reductions and fee waivers on offer. There is the additional benefit of NAB’s easy and well-resourced internet banking service.
However, if the interest rate is your driving motivation behind your new loan, regardless of the market clout of the provider, then you might be able to find better deals on your home loan, transaction account and credit card that will save you money in the long term.
Note: This review provides general information about the above home loan. Any views expressed are the author’s own. It is not intended to be a recommendation of a particular product. To the extent that this commentary may constitute general advice, this advice is of a general nature and does not take into account your individual objectives, financial circumstances or needs. We recommend that before you make any financial decision you seek professional advice from a suitably qualified adviser and read the PDS. Read more about our important disclosures here.