Loan features

Getting the most from your loan

As lenders become more competitive, greater flexibility and features to loans have been introduced which can save you money. Lenders often enhance their features so it is worth keeping track of what’s on offer. The cost of a loan with all the ‘bells and whistles’ will be higher for small loans. For the average loan of $250,000 or higher, there is little difference in the costs between a basic loan with no features and a loan with all the ‘bells and whistles’. Different lenders have different policies, and we can help you compare the difference.

Professional Packages
These are a packaged bundle of features and discounts which generally attract an an annual fee for the package. Discounts may initially include a nil, or reduced, application fee, no monthly account keeping fees and a discount on interest rates. The amount of the discount offered will depend on the amount borrowed. Other features may include waiving other costs associated with the loan, such as redraw fees and offering offset accounts . Some lenders include discounts on other products, such as building and contents insurance, travel insurance and a rewards program. Professional packages will vary between lenders and it is important to understand the eligibility criteria.
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Portability
Retain the same loan when you sell your property and buy a new property (called ‘substitution of security’). Portability is subject to a satisfactory valuation of the new property. If you need to increase your loan, you will be subject to the lender’s usual assessment criteria to ensure you can afford the increase. Most lenders charge a portability establishment fee. This can provide a convenient option when going through the process of selling and buying a new property.
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Redraw
If you have made additional repayments to your home loan and are ahead in your repayments, this feature allows you to redraw the additional repayments you have made. Conditions to redraw will apply. Flexibility on this feature will vary between lenders and products.
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Repayment holidays or Payment Pause
Some lenders offer the ability for borrowers to reduce or pause their scheduled repayments. Depending on the circumstances and the the policy, the lender may only allow repayment holidays if you have made additional repayments and you are ahead in your payments.
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Parental leave
As with the repayment holiday/payment pause, some loans have a parental leave feature which allows borrowers to reduce their payments while off work when having a new baby. Generally you will need to be ahead in your repayments or have the borrowing capacity to extend your loan amount to cover the reduced payments.
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Salary Credit
Some types of loans will let you salary credit into your loan account until you need it. The advantage is that your salary reduces the loan balance saving you interest. To withdraw money for your regular expenses will depend on the type of loan account you choose. Some loans are an all-in-one account, others you will be required to transfer the funds out of the loan account into a transaction account.
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Offset accounts
Designed to reduce the interest cost incurred in your loan account, an offset account is either a transaction or savings account which is linked to your loan account, where the amount deposited offsets the amount in your loan account. Details on how these accounts operate and whether they offer you a full 100% or partial offset, are available directly from the lender or your financial planner.
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