Home Loans Guide, Step 5 of 7, Features

When you begin your search for a home loan there is a lot to take into consideration. It’s not simply about finding the cheapest home loan rate, although this will play into your final decision, it’s also about finding a loan with the right features.

We’ve put together a list of the most important home loan features and services to help you choose the right home loan for you.

Additional repayments

Making extra repayments on your home loan will lower your total interest and shorten the length of your loan – which could save you bucket loads. Make sure to check if costs apply.

Interest only

Popular among property investors, interest only repayments allow you to pay off the interest only aspect of the loan first to reduce the mortgage repayments in the short term. But while you may save money in the short term, interest only repayments will prevent you from growing equity and making a proper dent in your mortgage.

Introductory rate

This feature offers a reduced interest rate for a specific period of time at the beginning of your loan term. Introductory loans can be a great way to ease new buyers into the home loan market but be aware that after the introductory period ends, the interest rate reverts to a higher interest rate, which may not be the best deal on the market.

Line of credit

A line of credit allows you to access the equity in your current home and use that money for whatever you like, from a holiday to home renovations.

Lump sum repayments

Ask your lender if you can make bulk payments on an ad hoc basis. This could be beneficial if you encounter an unexpected windfall or a hefty tax return which you want to put straight into your home loan.

Mortgage offset

A mortgage offset is transaction account linked to your home loan where the balance of the transaction account is offset against the unpaid balance of your loan to reduce the amount of interest payable. Offset accounts are a desirable loan feature as they can significantly reduce interest and years of your loan term – but they also tend to have higher interest rates too. 

Mortgage Portability

Mortgage portability allows you to transfer your loan from your current home to a different property. This can sometimes reduce fees, including establishment of a new loan, if you are selling and purchasing a new property.

Redraw facility

A redraw facility allows you to access extra money you have added to your mortgage. The more money you put into a redraw account – the less interest you will pay on your home loan. Be aware that fees and charges may apply.

Reverse mortgage

This type of loan allows you to use the equity in your home as security to borrow money without an income stream. Although you are not required to make repayments while you are still living in the home, interest still applies and is compounded over time. The loan will need to be paid off in full when you sell the home, move into aged care or pass away.

Split option

If you are struggling to decide on a fixed or variable interest rate you can consider splitting your home loan half and half.

Walk through the complete Home Loans Step by Step guides below;

Home Loans Guide – Step 1 of 7 – Amount
Home Loans Guide – Step 2 of 7 – Purpose
Home Loans Guide – Step 3 of 7 – Type
Home Loans Guide – Step 4 of 7 – Deposit
Home Loans Guide – Step 5 of 7 – Features
Home Loans Guide – Step 6 of 7 – Application
Home Loans Guide – Step 7 of 7 – Fees & Charges

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