What to look for in a package home loan

17 January 2019

A package home loan can provide the convenience of having most of your financial products with the same financial institution as your home loan, with many offering discounts and fee waivers for those willing to bundle.

While the added convenience and allure of discounted products could benefit homeowners, it’s important to do your homework to make sure that you are getting a great deal.

Package home loans remain a popular choice for Australian homeowners interested in accessing fee-free and discounted products from the same lender.

Often they provide discounts for consumers willing to bundle financial products such as offset accounts, credit cards and transaction accounts.

Typically, packages offer a discount off the standard variable interest rate for your home loan and come with the option to sign up to discounted insurance, personal and car loan products.

However, not all discounts are created equal.

There are outstanding value package home loans on offer, but it’s important to weigh up the overall cost of the home loan when searching for the right package for you, Canstar Research Analyst Josh Sale says. 

“A home loan is typically the most expensive financial product a consumer will have and so it should be at the forefront of your decision when choosing which financial institution you want to package your banking with,” Mr Sale said.

He said borrowers with a $500,000 home loan could save more than $30,000 over the life of the loan by choosing a 5-Star Rated package home loan compared with the market average package home loan.

“While some package home loans offer more bells and whistles, such as complimentary reward cards and discounts on home insurance, the cost savings in isolation are unlikely to outweigh having a competitively priced home loan,” he said.

Canstar has rated 26 package home loan products and awarded four with a 5-Star Rating for offering outstanding value for customers.

The 5-Star Rated providers are listed below in alphabetical order. Each one provides a package that is available to investors and owner-occupiers, as well as a choice between a principal and interest or interest-only home loan.

Auswide Bank

Canstar’s researchers found Auswide Bank’s Freedom Package offered one of the most competitively priced package home loans in the market. It offered variable home loan rates starting from 3.64% per annum (4.04% comparison rate), at the time of writing, and came with a fee-free, low rate credit card and a fee-free everyday account. Optional add-ons included insurance discounts, waived switch fees and application fees for personal loans and a complimentary financial health check. It had an annual fee of $395.

Greater Bank

This provider’s Ultimate Package offered variable rates starting from 3.72% per annum (4.09% comparison rate) across its home loans, at the time of writing. Included in the bundle were a fee-free low rate credit card and a fee-free everyday account. Flexible repayments, a 100% offset account with unlimited free withdrawals, insurance discounts and a complimentary financial planning consultation are other add-ons offered. It had an annual fee of $395.

Heritage Bank

Heritage Bank’s Home Advantage package provided variable home loan interest rates starting from 3.72% per annum (4.08% comparison rate), at the time of writing. It also offered a 100% offset account for variable loans and a fee-free redraw facility. Other features included were: a fee-free low rate credit card, an everyday account, optional insurance discounts and an online redraw on eligible personal and car loans. It had an annual fee of $350.

Newcastle Permanent Building Society

This provider’s Premium Plus Package Residential variable rate product had rates starting from 3.89% per annum (4.28% comparison rate), at the time of writing. Its package included a fee-free low rate credit card and everyday account, insurance discounts, waived application fees for personal and car loans and a 100% offset account on variable loans. It also offered a fee-free redraw facility. It had an annual fee of $395.

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