Home loan package deals: Is it best for you?Published 21/12/11
Potential home-owners often struggle to find the best home loan available, but they may not realise they can save tens of thousands of dollars by looking for a package deal.Home loan lenders, in an effort to attract customers to take out a mortgage, devised these home loan ‘packages’ to bundle certain financial services together. These packages could feature:
Fees aside, these packages offer something exceptionally beneficial to customers: a reduced interest rate for the life of the home loan. In fact, some lenders offer a home loan rate cut of up to 1%. While seemingly insignificant, 1% less interest over 25 years for a $300,000 home loan would actually result in substantial savings…of over $50,000. Because of this, customers might even be able to make extra home loan payments to cut several years off their loan (and ultimately save more money). In theory, the total amount saved on your home loan through the reduced interest rate should easily offset the costs of an annual fee (around $10,000 in 25 years). Package loans are not for everyone though. If you are only looking to borrow a smaller amount such as $100,000, make sure you do all your sums first – as some of the discounts available may not be sufficient to cover the annual fee. Therefore, you may be better off favouring a low-cost, stand-alone home loan. Also, when comparing package banking discounts, prioritise the products you will actually use. After all, you are paying for the banking bundle, whether you use it or not. So the value you ultimately get will depend on product utilisation, read the fine print before you make any decisions. If you’re aiming for an average or large home loan, do the sums on a package deal with the one lender to check how much you will save in the long term compared to stand-alone products. Compare Home Loans... |
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