One of the main benefits of package home loans is that the borrower can pay one annual fee for a bundle of products such as their home loan, a credit card, and more. Product packaging can be good value on a long-term basis, provided the extra products included are genuinely of use to you.
What are the products included in a package home loan?
When taking out a package loan, there is often the requirement to sign up for certain other products, such as a credit card and transaction account with the same financial institution. The products included vary from provider to provider, but in short, we would expect a package home loan to offer the consumer the ability to include some or all of the following:
- Home loan
- Credit card
- Transaction account or offset account (fee-free)
- Home and contents insurance
- Car insurance
- Landlord insurance (for loans on investment properties)
- Life insurance
- Income protection insurance
In general, borrowers will be offered a low fee credit card in a package deal. But the type of credit card provided does vary between institutions, and some packages may only waive the annual fee for the first year.
Institutions may also offer several credit card choices for the borrower to choose from. So it pays to select the one which reflects your usage and repayment levels. How the credit card is used will affect the savings you can achieve from the package.
Similar to credit cards, transaction accounts will not, in general, attract any ongoing account-keeping fees. You may still have to pay transaction fees, but with the growing trend of “no fee” accounts, some transaction costs are a thing of the past.
Online share trading platforms
Two providers we research and rate offer a rarer perk in their package home loans – a discount on the fees for their online share trading platform: Bendigo Bank (Bendigo Invest Direct) and Suncorp (Share Trade). Online share trading fee structures are often quite complicated, so we don’t have data available for Suncorp’s platform discounts because the fees that apply would vary from investor to investor. However, the fee discounts on offer from Bendigo Bank are as follows:
- Bendigo Invest Direct:
- Brokerage for trades up to $22,000: $17.95 (discounted from $19.95 normal price)
- Brokerage for trades over $22,000: 0.10% (discounted from 0.11% normal price)
When deciding on a package loan, don’t forget to look beyond the home loan interest rate and ensure the other perks and benefits will provide a true benefit to you. The bottom line is that with a normal home loan, you pay for what you use when you buy stand-alone products – but with a packaged loan, you pay for all the included products regardless of whether you use them or not.
CANSTAR is an information provider and in giving you product information CANSTAR is not making any suggestion or recommendation about a particular credit product. If you decided to apply for a home loan, you will deal directly with a financial institution, and not with CANSTAR. Rates and product information should be confirmed with the relevant financial institution. For more information, read our detailed disclosure, and our Financial Services and Credit Guide.
What savings are possible with packaged products?
We found the following average annual fees on offer when we researched our 2017 Package Home Loan star ratings:
|Package Standard Variable||Non-Package Variable||Difference|
Source: CANSTAR. Data as at 5 January 2017. Based on loans available for $350,000, 80% LVR and principle and interest repayments.
When it comes to insurance, we found the following average discounts on offer for package home loans in our 2017 star ratings:
|Income Protection Insurance||5%||6%||10%|
|Home and Contents Insurance||5%||10%||20%|
Source: CANSTAR. Data as at 6 January 2017. Based on available packages listed on CANSTAR’s database.
To find out more about the benefits included in package loans, read our CANSTAR Guide to Package Home Loans.