When shopping around for a home loan, attention is often given to home loan rates, but these are just one consideration when it comes to finding the best home loan. The right home loan features (or lack thereof) can make a big difference to how much you pay over the life of your loan and how soon you can pay it off.
Extra repayments
You may think a lender would happily accept additional mortgage repayments, but not all home loans allow them. “Extra repayments” is a specific home loan feature that enables you to make additional payments on top of your regular repayments. This feature is particularly useful if you receive a bonus at work, tax refund or inheritance.
By paying this money into your home loan you can reduce your principal, and as a result the interest payable, which could potentially lead to an early exit from your home loan.
Redraw facility
A redraw facility allows you to withdraw any extra repayments you have made. This means you can make extra repayments and reap the benefits of reduced interest, but you can still access additional funds at a time you may need them.
This feature may also let you skip a mortgage repayment, provided you have made enough additional funds to cover that repayment.
This feature is particularly helpful when unexpected events arise, for example, if you lose a job, become ill or need to pay for repairs.
Offset Account
An Offset Account is popular home loan feature that allows the borrower to deposit funds into an account, which can then be used just like an everyday transaction account. Salaries can be paid into this account, and the funds in the account are used to offset the principle on your home loan.
For example, if you have a home loan of $400,000 and has $100,000 in an Offset Account, they will only pay interest on $300,000. This gives you access to your money when you need it, with the added benefit of reducing the interest payable on your home loan.
Home loan portability
Chances are you will need to relocate or upsize before your 30-year loan term ends. Home loan portability means you can take your mortgage with you when you move house. This feature means you don’t have to change your home loan, avoiding the exit fees and establishment fees applicable when you change from one home loan to another.
Home loan top up
This is a helpful feature which allows you to borrow more money once you have built up significant equity in your home. These additional funds can help you to pay for renovations or a new car whilst taking advantage a lower home loan interest rate.
While increasing your mortgage isn’t conducive to saving money, it can be a smarter way to access more funds when compared with other options like a personal loan.
Which home loan features are right for you?
Home loan features are usually subject to certain conditions and criteria, so it is important to read through the terms of each home loan to determine if it is right for you.
At Mortgage House, we are no stranger to the homeowner’s journey. It’s a long (but rewarding) one. Our Lending Specialists can set you up with the right home loan to suit your needs or help you refinance so you can take advantage of great home loan features that will help you save money. Apply Online today to get your home loan application started!
