The ANZ Breakfree Package bundles together your ANZ home loan with transaction and credit card accounts, giving you discounts on those products, similar to when you bundle your telecommunications with one provider.
The package makes good sense for someone who wants the convenience of keeping all their financial products with one of the biggest lenders in the market providing benefits such as 24-hour customer support and access to ANZ’s financial planning services.
ANZ offers several variable and fixed rate home loans, with a wide range of features on variable loans especially, including a 100 per cent offset account facility and the ability to make as many additional and lump sum repayments as you like. These features are great tools that help you cut interest costs considerably over the life of the loan. ANZ also offers some sizeable interest rate discounts on variable loans if you borrow a large amount, which is the reality for many people given high property prices in Australian cities.
The size of the annual fee on the package may, however, put you off, especially if don’t have spare cash to put into an offset account or you’re on a tight budget. In this case, the loan extras may not help you save money but it is worth completing a review of the benefits to understand if this product is for you.
More specific product information is available here.
Review of the highlights
If you’re already an ANZ Bank customer and have other financial products with the bank, such as a credit card and a transaction account, you could benefit from bundling a new home loan with your existing products. Even if you’re swapping over from another bank, if you hold high fee products such as credit cards, you could save money given fee waivers and reductions on a wide variety of ANZ banking products. For this reason, it’s worth doing a review of your banking options.
The bank will, for example, waive a number of charges such as the annual fee on an ANZ credit card. The ANZ Breakfree Package also offers discounts and fee waivers on home and car insurance. You can get a discount on a one-off adviser service fee with ANZ Financial Planning, which may be useful if you need financial advice.
Another great bonus is that there is no upfront fee, which is very helpful, as even low cost lenders often apply high fees to establish a mortgage.
Once in, the package offers a wide variety of ANZ home loans from which you can choose, including fixed rate loans with terms ranging from one to 10 years. You can also ‘spilt’ your loan, which means you can keep part of your loan on a fixed rate, and keep the remainder on a variable rate, with the division of loans up to you. The ANZ Breakfree Package can also provide a construction facility for anyone building a new home or doing major renovations. These extra components make the package flexible.
You also get a free offset account, which is a great way to cut interest costs as they link your mortgage to a transaction account. The balance in the transaction account is then used to offset the home loan balance, which reduces interest costs. As interest is calculated daily on the mortgage, benefits accrue as soon as there is cash in the offset account. There are tax benefits to this as tax isn’t paid on the interest credited to your savings account because the interest is not actually being earned as it offsets the home loan interest.
If you like convenience, then this package may be for you. ANZ is one of Australia’s major banks with hundreds of branches across the country and overseas. They also provide 24-hour banking service options via their website, app and call centre so you can choose to do your banking over the phone and online. You’ll also be able to sit down face-to-face with a personal banker, which isn’t always an option if you go with a lower cost home lender.
Review of the lowlights
If saving money on interest is your main priority, then there are definitely more competitively priced mortgages on the market. Even with the discounts available for bundling your loan with other ANZ products, it may be that this doesn’t do too much for your hip pocket over time if those products aren’t necessarily cheap to begin with and the discounts only apply for a limited time.
For example, the discount on ANZ Home Insurance and ANZ Car Insurance only applies on the first year’s premium. Given that you’ll be holding a mortgage for up to 30 years, then this is a very small benefit over time. If you don’t need financial advice, then the fee reduction on an adviser service fee is of no worth – and the reality is, most people aren’t after financial advice.
Another downside is that ANZ Breakfree fixed home loans don’t allow you to make additional repayments or lump sum repayments. That means you can’t repay extra on your fixed loan during the fixed term to cut interest costs. You should be aware that some other lenders do allow extra repayments on fixed loans, up to a certain amount. So this is a real drawback, though you are protected from future interest rate rises.
The annual fee for the ANZ Breakfree Package may also put you off considering that many other lenders who don’t charge annual fees for home loans. That package fee could eat into any savings that you make on other banking products. Having said that, the package cost is pretty much standard across the board for a package deal with any of the big four banks. You’ll also pay a discharge fee when your loan finishes or if you switch to a different lender. But it’s not overly high.
The key advantage of combining all of your products into one package is that you’ll get discounts on other banking products, such as your credit card annual fee and transaction account fees.
So, if you are an existing satisfied customer of the ANZ, and you already pay a high credit card annual fee and monthly fee for a transaction account, this loan package could be considered a viable option as it will allow you to reduce fee payments which could work in your favour. In addition, if you are borrowing larger amounts, the interest rate discounts can also be substantial. But if you’re on a tight budget and simply want the lowest cost home loan, then this probably isn’t the most economic option and it may be worth reviewing what else is on the market.
The main downside of this product is the relatively high annual fee, which might outweigh the discounts. Whatever your financial situation, do the sums before taking out this package to make sure you’ll get ahead by bundling together your financial products. If you are not sure, it could be worth seeking financial advice to help you assess what your long term financial goals are and whether this package will help meet them.
Note: This review provides general information about the above home loan. Any views expressed are the author’s own. It is not intended to be a recommendation of a particular product. To the extent that this commentary may constitute general advice, this advice is of a general nature and does not take into account your individual objectives, financial circumstances or needs. We recommend that before you make any financial decision you seek professional advice from a suitably qualified adviser and read the PDS. Read more about our important disclosures here.