Get a lower interest rate and other discounts when you move all your banking to one lender.
Package home loans bundle together various products with your lender, including credit cards, personal loans and savings and transaction accounts.
You'll usually benefit from decreased fees and interest rates on your home loan and other linked products, and in exchange your lender will require you to pay an annual fee which ranges from $150 - $400, or even more in some cases.
Compare package home loan offers
Common features of a package loan
Package home loans differ depending on the lender. However, some common features include:
- An interest rate discount. This discount is often tiered on the amount you borrow. This means that even as official rates rise and your lender raises their interest rates you can maintain a lower interest rate.
- A 100% offset account. Many package loans come with an offset account. This is a transaction account linked to your home loan. Any savings you put in there will offset your mortgage principal and thus reduce the amount of interest you pay.
- Other financial products. The main point of a package loan is that it combines other financial products from the lender. This usually includes a bank account and credit card but can also include insurance packages and other products, with discounts on some or all of them.
- An annual fee. In exchange for these benefits, a package home loan generally charges an annual fee between $150 - $400, or more in some cases. This often replaces multiple other fees the lender charges for each product separately.
What are the pros and cons of a package home loan?
Here are the main benefits and drawbacks of package home loans.
- Convenience. Combining multiple financial products with one lender makes sense and is convenient. If the lender has a good app you can use your cards, accounts and mortgage seamlessly.
- Discounts. You can often get decent discounts as part of the package which can save you quite a lot.
- High annual fees. Package fees tend to be fairly high and are also charged every year.
- Higher rates. A package may not be your lender's most competitive home loan rate.
You should look at it like this: if the package is convenient and you actually all the products in it then it may be a good deal. Just make sure the rate is competitive and the fees aren't too costly. If you don't need the other products in the package and you can find a lower interest elsewhere than a package loan isn't for you.
How to compare package home loans
So you tick all the boxes and you're eligible for a professional package home loan. Now the only thing left to do is for you to pick a lender that suits all your needs. But how do you compare one lender to another? Just follow these steps and take a look at the different tables shown below to get informed before making a decision:
- Compare interest rates. Look at both the advertised rate, also known as the annual percentage rate, and also the comparison rate (shown as 'comp rate' in the table above). The comparison rate is an indicative rate which takes into account some of the fees you'll pay over the life of your loan, and is generally worked out using the example of a $150,000 loan taken out over 25 years.
- Compare fees. As mentioned, package home loans come with annual fees. You'll want to make sure these fees are worth it in terms of features and interest rates.
- Compare features. Ensure that the loans you're looking at provide features you'll use. If you want to make extra repayments on your home loan, ensure your loan allows you to do this. If you want to have your salary paid into your account each month