Westpac’s Premier Advantage Package is one of many packaged home loans currently on offer by banks on the market.
Essentially, you choose a Westpac home loan from a range of selected products and bundle it together with a Westpac transaction account. For an annual fee, Westpac then offers you a discount on your home loan interest rate and waives certain fees over the life of your loan. You also receive bonuses and discounts across selected credit card, insurance and wealth products offered by Westpac.
In the past, packaged loans were primarily offered to borrowers with professional jobs, but now they are available to anyone who is eligible. Under the Westpac Premier Advantage package, you can choose a loan to suit your needs from a wide range of variable and fixed home loans, each with different features such as an offset account, a redraw facility, a revolving line of credit, or premium services such as your own bank relationship manager. There is no limit on the number of eligible loans you can have within a package, which may be of use if you are looking to build a portfolio of investment properties. And small business owners, take note: unlike some of the other big banks, low doc home loans are eligible under Westpac’s package, although they have a smaller discount on interest rates and an establishment fee.
You can read more about the Advantage Package here.
A review of interest rates
One of the major selling points marketed by banks with packaged home loans is the discount you receive on interest rates.
Westpac’s package offers discounts ranging between 0.1 per cent and one per cent, depending on the amount you borrow. Loans under $250,000 attract the smallest discount, loans between $250,000 and $500,000 have a higher discount and borrowings over $500,000 qualify for the highest discount in the package. The bigger your loan, the more you are likely to save on interest, so it’s worth taking your loan size into consideration when deciding whether or not to go with a packaged home loan.
You can also save on interest if you choose a variable rate over a fixed rate loan, as the discount is generally higher for variable rate home loans. Don’t ignore fixed loans completely, though – Westpac often has special deals for short-term fixed periods under the Premier Advantage package. These offers usually come with a very low interest rate fixed over a short period, such as two years. Some find this appealing as you can take advantage of the low interest rate by paying off as much of your loan as possible within the fixed period, although keep in mind you can only make limited extra repayments without being charged a fee.
It’s also worth keeping in mind that Westpac’s discounted rate is not necessarily the lowest interest rate on the market. If the most competitive rate is what you’re after, you will most likely find an even cheaper rate offered by another lender if you review your options – one that doesn’t come attached to a hefty annual fee.
On the topic of fees, Westpac’s package doesn’t come without cost. The bank charges an annual fee for the Premier Advantage Package that is on par with the annual fee charged by other banks that offer similar packages, but significantly higher than the market average. In return, Westpac’s package waives your loan’s establishment fee, maintenance fee, top up fee, portability fee and unless you are moving to a non-packaged home loan, your switching fees. You also get a range of discounts and bonuses on other Westpac products such as credit cards, home and contents insurance, landlord insurance, personal loans, transaction accounts and wealth products, such as free brokerage for online ASX trades.
Are these perks worth the annual fee on a package loan? It depends. If you don’t plan to change the structure of your loan, you may end up paying a large annual fee to cover features you don’t really need. For example, apart from the monthly maintenance fee, the Westpac Rocket Repay home loan – one of the home loans on offer under the Premier package – charges fees for topping up your loan, transferring your loan to another property or setting up a progressive draw down for when you are building a new property and only need funds as construction progresses. If you are unlikely to use those features, it may be that an annual fee under the Premier Package Advantage will ultimately cost you more than the fees you would incur under a standard loan.
Secondly, it’s worth reviewing whether you want the financial products offered. Do you want a Westpac transaction account and credit card? Would you prefer to keep your home loan separate to the rest of your banking? What about home and contents insurance? This package could save you money if you regularly use a credit card and like the idea of bundling everything with one bank, but if you prefer to keep things simple, a more standard loan may be your cup of tea.
Banking with one of the big four
Westpac is the second largest bank in Australia and one of the ‘big four’. Using a well-established bank certainly has its advantages such as a state of the art mobile banking app and comprehensive online banking services. In addition to this, Westpac has thousands of branches across the country, giving you the ability to walk into a branch and talk through any issues you might have with a banking representative face-to-face.
Of course, these services often come at a cost – usually in the form of higher fees and interest rates – so if you don’t mind the idea of using an online lender it is worth checking smaller lenders out.
The value of Westpac’s Premier Advantage package will depend on what you want to get out of your home loan.
Bundling your loan may be a good fit if you are borrowing over $250,000 and qualify for a larger discount on your interest rate. On top of that, if you are likely to make changes to your home loan in the future, already have a bank account with Westpac, or are a big credit card user, then the fee reductions this package offers may be the icing on the cake.
However, if you plan to borrow less than $250,000 and don’t need too many features on your home loan, a package with bells and whistles like Westpac’s may not be what you’re after. In the long run. A more basic product with a lower interest rate may save you more money than a packaged deal that discounts fees you aren’t likely to pay.
As with everything, it is worth doing the research. There is a large range of home loans offered under the Westpac Premier Advantage Package and each have different features. Getting the best value out of this package will largely depend on selecting the home loan that is best for you. Also, check the interest rates attached to each home loan – applying any discounts you may qualify for under the package – and compare it to other rates on the market to find the most competitive offering.
Finally, add up any fees you are likely to occur throughout the life of a loan and compare them to the annual fee for a packaged home loan. By working out whether the lower interest rates and reduced fees offset the annual fee, you will be better placed to determine whether or not this home loan is the right option 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.