Home loan features explained

The interest rate isn’t the only thing you should consider when looking for a home loan. Here are some home loan features you should know about.
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When you start your home loan search, the interest rate isn’t the only thing you should consider. There are many home loan features that could save you money and help you manage your loan.

In this guide we’ll run you through some common home loan features you may want to consider looking out for.

Redraw facility

If you’ve made extra repayments on your home loan, a redraw facility allows you to dip into the payments you’ve made.

These extra repayments will accumulate separately to your normal repayments. Let’s say for example, your minimum monthly mortgage repayments are $2,000 and in one month you repay $5,000. You could withdraw the extra $3,000 whenever you like.

Some homeowners choose to redraw for expenses like:

  • Paying down debts

  • Funding renovations

  • Paying for a holiday

  • Funding a wedding

Keep in mind you can only withdraw the extra repayments you’ve made on your loan - not the minimum regular repayments.

Funds in a redraw facility are generally less accessible compared with funds in an offset account. The funds may not be available for same-day withdrawal and you may be limited to a certain number of withdrawals per year.

At loans.com.au, you get the flexibility of accessing your redraw facility 24/7 by using our Smart Money app and an unlimited number of withdrawals with your redraw facility.

100% offset

An offset account is similar to an everyday bank account except that it’s linked to your home loan. Offset accounts work by offsetting the money in the account against the balance of the home loan principal, so you only pay interest on the difference.

Unlimited additional repayments

Additional repayments are a feature of many home loans where you can pay extra on top of your regular minimum monthly repayments.

If your home loan allows you to make unlimited additional repayments, you can pay extra on your mortgage without being penalised.

All loans.com.au products offer unlimited additional repayments.

Loan splitting

When you take out a home loan you choose between a fixed rate which is locked in for a set period of time, or a variable rate which changes with the market - but did you know you can have the best of both worlds?

A split rate loan is when you fix only a portion of your home loan. This gives you some security if interest rates rise, while the remainder will remain variable.

Interest-only

When you take out a home loan, you will eventually have to pay back the principal of the loan and the interest charged by the lender.

With an interest-only home loan, for an agreed period of time you will only pay the interest each month, instead of the interest and principal. This means your monthly repayments will be lower during that period. This makes interest-only home loans popular for investors because they can claim the interest charged on their home loan at tax time.

Repayment schedule

In Australia, the standard home loan repayment schedule is monthly but you can also make fortnightly and weekly repayments.

Making more frequent repayments can also mean you’ll pay off more over a year. For example, there are 26 fortnights in a year, so if your fortnightly repayments are $1,000 you’ll have paid off $26,000 by the end of the year. Comparatively, if you only made monthly repayments you would have only paid back $24,000 over the year.

Apps to manage your loan

It is worth looking at what apps your lender offers to apply for and manage your loan because they make borrowing much more convenient.

Our onTrack mobile app allows you to manage your home loan from application through to settlement while we do all the heavy lifting for you behind the scenes. You can use onTrack to book appointments with your lending specialist, upload, review and approve documents, and track the progress of your loan.

Once settled, Smart Money gives you access to a full range of account management functions. You can view your account balances and transactions, transfer money and pay bills, send and receive messages from loans.com.au, query a transaction and many more.

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Tags: applying for a home loan | home loan repayments

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