On Loan: The Features You Should Know About
When taking out a home loan for the first time, the excitement can be overwhelming. However, when complicated financial jargon gets thrown around, it’s okay to be thrown off.
According to a survey conducted by the mortgage provider, ME, only 41% of Australians are confident they know enough to find the right home loan that suits their needs.
While speaking to a mortgage broker is the best option when trying to determine which home loan suits your circumstances, we have listed some mortgage features to consider.
• Fee-free extra repayments
Even by putting an extra dollar into your mortgage every day can make a big difference in the money you save on long term interest. This is a feature worth considering as by making extra repayments at no additional cost, you may be able to shave years off your loan.
Not unlike a port-a-loo, this feature allows you to up and move your loan if or when the time comes. You’ll be able to take a current loan along with you if you move home, meaning you may be able to avoid paying breakage costs for the old loan as well as establishment fees for a new one.
• Redraw facility
This feature comes in handy when you’re short of cash in an emergency. While it gives you access to any extra repayments you’ve made, it will put you behind in terms of interest savings. Watch out for terms and conditions, such as; the number of free redraws per year, fees for redraw and the minimum and maximum amounts you can take.
• Mortgage offset account
This feature allows you to put your savings to work and reduce your loan interest charge. It works by deducting the amount of savings from your loan so that when the interest is calculated, you pay less. To find out more, check out our previous post where we talked about it in depth.
• Direct salary credit
This feature allows your salary to be paid directly into your home loan account. If you aren’t a great saver, this offers you an advantage and head start.
• Repayment holiday
This feature is pretty self-explanatory. It offers you either a complete break from repayments or a period of reduced repayments. If you are experiencing a career change or undergoing breaks like maternity leave, this feature can be especially useful in the long run.
This feature enables you to increase the limit on a home loan using the equity in your home for other needs. If you have plans to undergo renovations or perhaps invest in another property in the future, this feature could be incredibly useful to consider.
These are just some of the features available when deciding to take out a home loan. Speaking to your broker in depth about your options is a sure way to understand your choice before you make it.
At Select, we offer no-obligation, quality and free advice to help you reach your financial goals. Give us a call on (08) 9417 3399 to talk with one of our brokers.