Newcastle Permanent’s Premium Plus Package home loan gives you a choice between a variable rate home loan or a credit facility, bundled together with a low variable interest rate, offset account, fee reductions and discounts on other financial products.
Both owner-occupiers and investors are eligible for this package, although there is a different deposit required for each – investors need to have a 10 per cent deposit, while owner-occupiers only require five per cent. You can select either a variable rate loan with no minimum loan amount or, if you have existing equity in a property, you can take up a credit facility which acts as a line of credit, allowing you to draw on the equity in your home up to an approved limit. You can also combine both a variable home loan and credit facility into one package – a handy option for those who are renovating and need to pay multiple bills over time, or investors who want to draw on their equity as a deposit for other property purchases.
The repayments for this loan are principal and interest over a maximum term of 30 years. If you want to take a break from making full repayments for a period, an interest-only option is available for up to five years. Repayments can be made on a weekly, fortnightly or monthly basis, giving you the flexibility of scheduling your repayments to suit your budget and circumstances. Repayments aren’t difficult to make – as one of Australia’s largest mutual building societies, Newcastle Permanent offers phone banking, online banking and a mobile app, while an SMS service allows you to receive account details on your phone. The lender also has an extensive branch network and ATM services, delivered through the Westpac group and Visa debit cards.
You can read more specific information about this product here.
Interest rate and fees
Variable interest rates under the Premium Plus Package are based on the amount you borrow. Generally speaking, larger home loans are attached to lower variable interest rates, with loan balances over $900,000 attracting the lowest variable rate offered under this package.
Compared to other lenders, the package’s variable interest rates are quite low, but do not rank among the most competitive rates on the home loan market. However, Newcastle Permanent is currently offering some special variable rate discounts for borrowers who apply for the Premium Plus Package, or existing customers who convert to a Premium Plus Package and increase their borrowings by a minimum of $150,000. With these discounts – which differ depending on whether you’re an owner-occupier or investor – the package’s variable interest rate becomes far more competitive.
Low interest rates don’t come without a cost. The Premium Plus Package comes with an annual package fee that is higher than the market average for annual fees, although on par to the packaged annual fees charged by the Big Four banks. This fee may be worth it in the long run – under the Premium Plus Package, Newcastle Permanent waives your establishment fee, redraw fee and conversion fee if you decide to change from one loan type to another. It’s a good idea to calculate whether the annual package fee exceeds the amount you would potentially save in waived fees over the term of your loan, as this will help you work out how much you will actually pay in fees and charges under this package.
Features and discounts
The Premium Plus Package comes with a number of useful features which may help you save money, or tailor your home loan to suit your circumstances.
For those who are determined to pay down their home loan as quickly as possible, additional repayments and extra lump sum payments are free under the Premium Plus Package with no early exit fee. The package also comes with a 100 per cent offset account, so you can use any savings you accrue to shrink the overall interest on your home loan.
For borrowers who want flexibility, this home loan is portable and comes with a free redraw facility that allows any amount to be redrawn in advance. Mortgage repayment holidays are also on offer, as long as there are enough funds in your loan account to meet your regular repayments. And for those who want to combine a variable rate with the regularity of fixed rate loan repayments, a split loan facility is available.
The Premium Plus Package also offers benefits that extend to other financial products offered by Newcastle Permanent. These include no account keeping fee on the lender’s Everyday transaction account; no annual fee on its Value+ credit card; no application fee on car and personal loans; and a five per cent discount on car insurance, a 10 per cent discount on home and contents insurance, a 10 per cent discount on landlord’s insurance, and a 10 per cent discount on travel insurance.
Package customers are also entitled to additional interest on their Rapid Save account and Statement Savings account. If you already bank with Newcastle Permanent, or if any of their products appeal to you based on their merits, being eligible for discounts under the Premium Plus Package may be a welcome perk.
Who this product suits
Newcastle Permanent’s Premium Plus Package may be right up your alley if you are money-savvy and have paying down your loan quickly as a top priority. The home loan’s offset account is a useful tool in reducing your interest over the term of the loan, especially if you’re the type of borrower who is highly motivated to save and keen to put your money to work. Being able to make extra repayments or lump sum repayments can also help you pay off your loan over a shorter period of time.
This package may also suit your needs if you want to combine a credit facility with your home loan in order take advantage of the equity – perhaps to embark on a home renovation, fund an extended holiday, or to create wealth by building up an investment property portfolio, although keep in mind that a credit facility comes with a slightly higher interest rate. A word of caution, though: a good measure of self-discipline is needed to stay on top of your balance, as repayments with a credit facility are not required straight away.
Who this product may not suit
There are some downsides to be aware of with this deal. The Premium Plus Package won’t suit everyone, as there is no low doc home loan available, no construction facility and no fixed rate home loan unless you opt for a split loan arrangement. You may also be able to find another home loan that offers an even lower variable interest rate or one without the large annual package fee.
It’s also wise to ask yourself whether you actually want the financial products that are discounted with this package. In the long run, it may not be worth paying the annual package fee for a bundled home loan if you can get a better deal on your insurance or credit card with another lender. If you do want to bundle your financial services under one umbrella, you may want to compare Newcastle Permanent’s package deal with other bundled products on the market, as you may find similar savings in terms of fees and discounts, but a better interest rate or more appealing features with another lender.
Ultimately, knowing your long-term financial goals and doing your research into what’s out there on the home loan market will help you make an informed decision about whether this home loan package is right for you.
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.