Bundled home loans
Bundled home loans, also known as packaged loans, allow you to combine a number of different financial products from the same supplier. Generally you have the option of adding to your standard variable home loan one or more of the following:
- Credit cards
- Financial planning
- Insurance products (building and contents, car, income protection, life, total and permanent disability)
- Mortgage offset account
- Savings accounts
- Share trading.
Why opt for bundled home loans?
Telecommunications and utilities companies have found they can offer customers a better deal by supplying a variety of products together. For example Telstra currently offers bundles that include broadband, home entertainment as well as mobile and home telephone services. In a case the services usually will be available for one fixed fee instead of three or four separate ones.
In the same way, bundled home loans can provide a range of financial products, as noted above, that you can tailor to suit your particular circumstances. This type of loan generally offers you the convenience of having one supplier and one fee as well as advantageous discounted rates.
What are the main choices for bundled home loans?
Not all bundled home loans are the same and the bundle you choose should be based on your status and the reasons you want a home loan in the first place. For instance, if you are in the process of buying your home, then as an owner-occupier you will probably be best seeking a package that includes an affordable, strong variable rate loan, a credit card and possibly a savings account.
If you are self employed you might want a credit card and a transaction account plus a flexible loan with an interest only option where minimal documentation is required. This is helpful if your business income fluctuates from time to time. If your plan is to borrow to invest in one or more properties then flexibility will also be key and a discounted loan at a fixed rate, plus a credit card will also be useful.
What are the rewards and risks?
There is no doubt that bundled home loans are convenient and the lower interest rates are attractive. If you have considerable assets you can benefit from extra interest on savings and foreign transactions, which may be useful. Also, bundled home loans often offer flexible loan facilities that can become very important if your circumstances change.
However, if you know that you won’t use the features in the package a bundled home loan may not be right for you. If you already have a good deal on a credit card, for instance, or you don’t need another transaction account and the discounted insurance products don’t suit you then a package is probably a waste of your time and money. It’s also the case that if you want to borrow a relatively small sum, say $100,000, the fee for the bundle might not be covered by the discounts on the features and a stand-alone home loan at lower cost may suit you better.