Similar to bundling your home telephone, mobile, and pay TV with one company, bundling your finances could save you money off your home loan. This could be appealing if you are a first home buyer looking for a reduced home loan rate and an easier way to manage your finances.
What is a package home loan?
A package home loan is where a number of products such as a home loan, transaction account and a credit card are bundled into the one package at a reduced rate.
Lenders typically offer these as a way of enticing borrowers to move all of their business with the one institution. They are quite popular with first home buyers as they offer a low rate, up to 0.7 percentage points off your home loan, as well as a reduction in rates and fees for the other products.
Are package home loans always the cheapest?
While some lenders do offer these package home loans, they may not necessarily be the best deals around and there may be institutions offering lower mortgage rates. To find out if you can find a better deal, you can compare home loan rates by shopping with the RateCity home loan comparison tool.
An example of this, in November 2010, RateCity recorded that the comparison rates for the lowest package home loans were at 6.63 percent. However, the best comparison rate for variable home loans was 6.51 percent. This would mean that over the life of a 25-year term loan valued at $300,000 you could potentially save over $6,600 by choosing the stand alone loan instead of the package home loan.
Does loyalty matter?
Some borrowers think that because they have had their savings accounts with the one lender since they were younger they will get a good rate. Most often this is not the case, however if you are in the market for a home loan, you could try negotiating with your lender stating you are a loyal customer. If they won’t budge, then compare home loans online and find a better deal.
No matter which company you bank with or how long you have been a customer with them, you may be able to get a better rate by shopping around and comparing online.
Take a look at package home loan deals that are available but also remember to look at all types of mortgages available so that you can find one that suits you and saves you more in the long term.