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Don't be wooed by home loan goodies

Don't be wooed by home loan goodies

Jeannie Messer reports on the latest home loan fads that may cost more than the free giveaway!

November 23, 2009

In this era of new austerity, home loan customers are sticking to the basics. Bells and whistles are out, responsible borrowing is in. While the housing market remains strong thanks to historically low interest rates and the First Home Owners Grant, people are very cautious. And when it comes to home loans, many are putting security first, even when it means missing out on savings.   

Before the credit crisis, the big four banks wrote about 60 percent of new mortgages.  That figure has risen to 90 percent, even though their mortgages are not the most competitive. 

In this climate, sweeteners are a good way for building societies and credit unions to get customers’ attention. Most of the goodies on offer are modest: holidays, pre-approved credit cards and discounts on home and contents insurance. 

One of the more interesting deals is the Greater Building Society’s fuel rebate, offering six months’ of petrol savings for every $100,000 borrowed. The 50 cents per litre rebate is valid for 80 litres a week, so a $300,000 mortgage would mean savings of up to $160 month for 18 months.

The rebate is attached to a home loan with a 5.8 percent variable interest rate but if you reinvest these savings in your home loan, you can still come out ahead of other products with a cheaper rate. If you don’t use your car often you won’t get the full benefits of the deal, and the rate isn’t the cheapest on the market but if you consider the savings you can make, it’s worth investigating.

Some banks also give borrowers a chance to save money by bundling their mortgage with a savings account and credit card. It’s important to remember that opting for a package can make it harder for you to switch if a better deal comes up in future, but a well-structured package is worth considering as you search for the best home loan.

A recent survey by Roy Morgan Research showed that credit unions and building societies enjoy higher customer satisfaction than banks so it’s worth looking into special offers. Just remember:

  • Read the fine print
  • Look beyond short-term savings to the long-term value of the loan
  • And weigh the costs of other features against the value of the special offers.  

Because when it comes to home loans, sometimes less is less. And while it is important not to be distracted by sweeteners, they might just be the icing on a pretty good deal. 

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Learn more about home loans

Can first home buyers apply for an ING home loan?

First home buyers can apply for an ING home loan, but first, they need to select the most suitable home loan product and calculate the initial deposit on their home loan. 

First-time buyers can also use ING’s online tool to estimate the amount they can borrow. ING offers home loan applicants a free property report to look up property value estimates. 

First home loan applicants struggling to understand the terms used may consider looking up ING’s first home buyer guide. Once the home buyer is ready to apply for the loan, they can complete an online application or call ING at 1800 100 258 during regular business hours.

How do I apply for a home improvement loan?

When you want to renovate your home, you may need to take out a loan to cover the costs. You could apply for a home improvement loan, which is a personal loan that you use to cover the costs of your home renovations. There is no difference between applying for this type of home improvement loan and applying for a standard personal loan. It would be best to check and compare the features, fees and details of the loan before applying. 

Besides taking out a home improvement loan, you could also:

  1. Use the equity in your house: Equity is the difference between your property’s value and the amount you still owe on your home loan. You may be able to access this equity by refinancing your home loan and then using it to finance your home improvement.  Speak with your lender or a mortgage broker about accessing your equity.
  2. Utilise the redraw facility of your home loan: Check whether the existing home loan has a redraw facility. A redraw facility allows you to access additional funds you’ve repaid into your home loan. Some lenders offer this on variable rate home loans but not on fixed. If this option is available to you, contact your lender to discuss how to access it.
  3. Apply for a construction loan: A construction loan is typically used when constructing a new property but can also be used as a home renovation loan. You may find that a construction loan is a suitable option as it enables you to draw funds as your renovation project progresses. You can compare construction home loans online or speak to a mortgage broker about taking out such a loan.
  4. Look into government grants: Check whether there are any government grants offered when you need the funds and whether you qualify. Initiatives like the HomeBuilder Grant were offered by the Federal Government for a limited period until April 2021. They could help fund your renovations either in full or just partially.  

Does the Home Loan Rate Promise apply to discounted interest rate offers, such as honeymoon rates?

No. Temporary discounts to home loan interest rates will expire after a limited time, so they aren’t valid for comparing home loans as part of the Home Loan Rate Promise.

However, if your home loan has been discounted from the lender’s standard rate on a permanent basis, you can check if we can find an even lower rate that could apply to you.

How do you determine which home loan rates/products I’m shown?

When you check your home loan rate, you’ll supply some basic information about your current loan, including the amount owing on your mortgage and your current interest rate.

We’ll compare this information to the home loan options in the RateCity database and show you which home loan products you may be eligible to apply for.