What are some important features that come with a home loan?
The interest rate shouldn’t be the only thing you consider when choosing a home loan. You also need to look at the loan’s features and fees, which will affect the overall cost and the options available to you after you take out the loan. Here is a list of common product features and their benefits:
- Offset account: This is like a savings account that is linked to a home loan. The balance of this account is offset against the loan amount. This will reduce the loan balance on which interest is calculated, meaning the more money you have in the account the less you pay in interest. Also, you have the flexibility of withdrawing the funds out of the account when needed.
- Redraw: This feature allows you to make additional repayments on your mortgage, with access to the additional funds if you need the money back later on.
- Top-up: If you require extra funds for renovations, for example, you can use the top-up feature to increase the credit limit on your existing loan, saving you the expense of establishing another loan.
- Rate lock: During the application process for a fixed-rate loan, you can lock in the current rate for a certain period of time. This protects you from interest rate changes during loan application till settlement. A fee may apply.
- Loan portability: If you decide to move home this feature allows you to keep the same loan, saving you the time, trouble and costs of changing loans.
- Repayment holiday: This feature allows you to halt your loan repayments for nominated periods as long as there are excess funds from extra repayments. This provides flexibility during lifestyle change or unforeseen circumstances.
- Parental leave: This feature allows you to reduce or halt your regular loan repayments during/after pregnancy for a nominated period if you meet certain conditions. It’s not available on all products and a fee may apply.
