Basic home loan or fancier package home loan?

These days most banks offer two main types of products: 

Basic home loans

Usually are a home loan with the following features:

–  a low or zero cost set up fee ($0 – $600) 
–  a low variable rate read this article
–  no ongoing monthly or annual fees 
–  most have redraw options but no offset facilities 

Pros: 
  • no ongoing costs
  • you can put extra funds into the home loan to save on ongoing interest charges
  • usually low set up costs
  • most loans have free redraw (but this is not the case with all products)
  • you can usually upgrade the loan type to the below package option at a later stage if you wish
Cons:
  • no ability to fix the loan or have offset facilities
  • epricing these loans with the bank can be more challenging as the broker may not have access to negotiate on your behalf 

Package home loans (fancier ones!)

Usually are a home loan with the following features:

– setup fees range from $0 – $350 typically
– typically a $395 annual fee
– most variable loans under package have both redraw and offset facilities
– some lenders will offer multiple offset accounts
– variable and fixed rate options and options to split the home loan read this article

Pros:
  • Offset facilities watch this video
  • usually low set up costs
  • with most lenders we have the ability to re-price the home loans ongoing 
  • ability to fix a portion of a home loan 
Cons:
  • $395 annual fee
  • Typically you cannot downgrade from a package home loan to a basic home loan with no annual fee

Note: when you we set up a home loan for you you’ll get a copy of a document called a loan simulator so that you can check your specific home loan’s features and charges. This information is general in nature and not related to a specific bank or product.