RateCity uncovers the benefits of choosing a home loan package over a regular loan if you are in the market for a home loan. But be careful of the catch – packaging can be harder to switch.
May 27, 2010
We all love a good-value deal – two for the price of one deals, percentage off deals, bonuses, early-bird specials – and the same goes with our home loans too.
Home loan packages can be a great option for customers who wish to bundle their banking products into a package that suits them. They are a great way to potentially save money by combining your home loan as well as other accounts such as credit cards, transaction accounts and more from the one financial institution.
Home loan packages are a great option for first home buyers but are also great for those wanting to buy an investment property or those who are self-employed. The packages offered by each institution will depend on the amount of money that you wish to borrow and how many other accounts you will link to the package.
Depending on your long-term borrowing goals, home loan packages can offer a range of benefits over regular home loans including:
- A reduced home loan interest rate of up to 0.7 percent per annum.
- Most institutions charge an annual package fee, such as Westpac‘s Premier Advantage Package, which is $395 per year. However, this replaces all other fees associated with your home loan and other products included in the package, such as loan approval and account service fees or monthly credit card fees.
- Access to discounts on other products such as insurance and superannuation products that are not available to regular home loan customers.
- Bonus interest on other accounts such as savings accounts.
- Packages offer flexibility not available to regular home loan customers, as financial institutions are more willing to waive fees for customers who would like to change their loan from a fixed to a variable rate or even customers who wish to change their mortgage options.
Keep in mind that package deals won’t suit everyone and there are disadvantages attached to this type of loan option as well. For example if you decide to move to another institution down the track it will be difficult to switch accounts because all of your accounts are linked.
Most financial institutions offer home loan packages as a way of locking in the customer with as many of their products as possible. It is a way of enticing you to move your entire banking needs over to the one institution, so it makes sense for them to make it worth your while by offering you a great package deal.
It may however not necessarily be the best value deal in town so make sure you compare home loan packages online to find out if there is one available to suit you.