If you’re trying to get a better deal on your mortgage, and improve your finances generally, it may be worth considering a package home loan, which bundles your mortgage together with other financial products, such as credit cards and everyday transaction accounts.
Lenders offer packaging as a means of attracting customers, while providing borrowers with convenience and potential savings.
By switching to a package home loan you can obtain significant discounts on your home loan interest rate, as well as a reduction in rates and fees on other products in the package, including in some cases, zero fees.
There are many package products to choose from and savings will differ between lenders. For instance, St George Bank’s Advantage home loan package provides discounts of up to 95 basis points off variable home loan rates. St George Bank says that based on a $300,000 standard variable home loan, packaged with an offset account, Platinum credit card and Complete Freedom account, customers could save over $3000 in the first year.
These savings arise from a combination of the usual home loan establishment fee of being waived, other charges including monthly transaction account fees and annual credit card fees also being waived, and the significant savings resulting from the interest rate discount.
Similarly, building society Newcastle Permanent‘s Premium Plus package offers of up to 85 basis points off its Premium Variable Home Loan and 75 basis points of its Real Equity Line of Credit.
Clearly, homeowners can save a packet with a packaged home loan, particularly if you compare the costs against other home loans on the market, as well as your current financial products before signing up. It’s important to note that some package deals charge an ongoing fee; $395 per annum in the case of the St George example, and $350 for the Newcastle Permanent offering.
Before you sign up, sit down and do the sums – it won’t take long and it could save you thousands of dollars.