Home loan features explained
A home loan is more than just repayments and interest rates. If you’re looking to save money on your loan, you need to look at the loan features available as well. With the right combination of features, you could have an easier time.
In this guide, we’ll run through some common home loan features and how they can help you save on costs and manage your loan.
Redraw facility
A redraw facility lets you access the additional payments you’ve made on your home loan. Let’s say, for example, your minimum monthly mortgage repayments are $2,000, and you decide one month to make a $5,000 payment. The additional $3,000 may be available to be withdrawn later on, subject to your loan terms.
By making additional payments on your home loan, you could reduce the amount of interest paid overall. However, if you do withdraw from the redraw facility, it could increase your home loan balance.
Keep in mind you can only withdraw the extra repayments you’ve made on your loan— not the minimum regular repayments. Funds in a redraw facility may not be available for same-day withdrawal, and you may be limited to a certain number of withdrawals per month.
If you’re looking for convenience and flexibility, loans.com.au gives you access to your redraw facility anytime, anywhere, using the Smart Money app with an unlimited number of withdrawals for certain loans.
Offset sub-account
An offset sub-account is linked to your home loan and works similarly to a savings bank account. You can deposit funds into an offset sub-account, and the money in the account will be offset against your home loan’s balance.
For example, you have a remaining home loan balance of $100,000, and you deposit $10,000 in your offset sub-account. The interest charged on your home loan will be calculated against your remaining balance minus the offset sub-account amount. In the example amounts given, you'll only have to pay interest on $90,000 if you have a 100% offset-sub account.
For those who are interested in using an offset sub-account, you could consider lenders who offer a 100% offset, like our variable bold home loan.
Unlimited additional repayments
Additional repayments refer to extra payments made on top of your regular repayments. Most lenders charge borrowers a fee when they make repayments, or only have a certain number of free additional repayments. However, having unlimited additional repayments may help you pay off your home loan faster.
If your home loan allows you to make unlimited additional repayments, you may be able to pay extra on your mortgage without being penalised. It's best to check with the lender to see if they have this home loan feature available before applying for finance.
Loan repayment frequency
The standard home loan repayment schedule is monthly, but lenders like loans.com.au also offer more flexible options like weekly and fortnightly loan repayments. Making more frequent repayments may also mean you’ll pay off more over a year.
For example, there are 26 fortnights in a year, so if your fortnightly repayments are $1,000, you’ll have paid off $26,000 by the end of the year. Comparatively, if you only made monthly repayments, you would have only paid back $24,000 over the year. As you can see, more frequent repayments can go a long way in terms of savings and could help you own your home more quickly.
Accessibility and flexibility
In addition to money-saving features, having a home loan that is easy to manage can be a huge help. For example, loans.com.au offers borrowers access to the onTrack mobile app that allows you to manage your home loan from application through to settlement at the palm of your hand. You can use onTrack to book appointments with your lending specialist, upload, review and approve documents, and track the progress of your loan.
After the loan application and settlement, loans.com.au customers can access their loan using our online services, called Smart Money, where borrowers can access a full range of account management functions. Using this feature, you can view your account balances and transactions, transfer money, pay bills, send and receive messages from our team and query transactions.
Not sure which features you need for your home loan?
Get in touch with our friendly lending specialists today, and they can walk you through your home finance options and how loan features can affect your loan. Call us at 13 10 90, or you can arrange a call, and we’ll get back to you!
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About the article
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
