Everyone dreams of the day when they can pay off their home loan. To do this you need to find a great rate, however, many people don’t think about the features a home loan has that can save them money.
Here are some home loan features you need to think about. If you select which ones suit your situation carefully you might just save thousands on your home loan.
Offset account
An offset account is where you have a savings or transaction account linked to your home loan. The money you have in this account can ‘offset’ the money you have in your home loan. This means that the interest charged by the lender is calculated on a lower amount. As an example, let’s say you owed $500,000 on your home loan but had $20,000 in your offset account. Your lender would calculate monthly interest on $480,000 rather than $500,000 which would reduce your interest charge.
This is a great way to save money while also having cash available for a rainy day.
Extra Repayments
It’s really important to have the ability to make extra repayments if you can. You might come across some extra money through a pay rise, overtime or even an inheritance. If you can put the money towards reducing your home loan you’ll lower your interest expense and own that dream home sooner!
Redraw
A redraw facility on your home loan lets you withdraw cash from your home loan for other purposes. This means you can put more money into paying off your home loan knowing that if something comes up and you need some cash you can ‘redraw’ it from your existing home loan.
While not directly saving money, this facility can encourage you to pay off more on your home loan knowing you can withdraw it if something urgent comes along.
Ready to get started?
Split home loans
Many people like to split their home loan and have a portion at a fixed interest rate and the rest variable. This allows you to make extra repayments and have a redraw facility on the variable portion while being less exposed to rate changes because of the fixed portion of the loan. This flexibility can help you save money by paying off your home loan sooner.
These are all great features but it’s important you understand the rates and fee’s associated so you are making the right decision.
We can help you sort through all of these options and assess the rates and fee’s that go with them. If you want our help it only takes 2 minutes to start the process.
Key point:
These are all great features but it’s important you understand the rates and fee’s associated so you are making the right decision.
We can help you sort through all of these options and assess the rates and fee’s that go with them. If you want our help it only takes 2 minutes to start the process.
