Finance
If you’ve been searching for a home loan, chances are you’ve come across home loan packages, also known as package home loans. Home loan packages can be alluring for borrowers because they often seem more convenient and even cheaper than regular home loans.
It’s important to get the full picture when it comes to home loan packages. In this article, we’ll explain what a home loan package includes and the various benefits and drawbacks, so you can decide if getting a packaged home loan is right for you.
A home loan package is a home loan bundled with various other financial products at a discounted interest rate or with fewer fees for each product. So, you end up with a ‘package’ of products alongside your home loan, all with the same lender.
A home loan package can include financial products like:
Home loan packages are usually only available on principal and interest loans but both owner occupiers and investors will find package loans available to them. You’ll also be able to find home loan packages for both variable interest rate and fixed interest rate loans.
If you take out a package home loan, you’ll be charged an ongoing annual fee, rather than multiple fees for each individual product included in the package. This fee is usually around $400 per year but can be as high as $700. By comparison, standalone home loans don’t usually attract an annual fee.
However, you may also receive a discounted interest rate on your home loan. This means you may pay an interest rate which is lower than what borrowers on a standalone home loan with the same lender pay.
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This totally depends on your personal needs and wants, but there are a few things you should consider when making a decision about whether or not a package home loan will suit you.
For a start, weigh up the pros and cons of home loan packages outlined above. Maybe you don’t mind paying a bit extra in fees for the convenience of having most, if not all of your financial products in the one place. Or, maybe you’d prefer to only take out products that you’ll definitely use, making a standalone home loan without extra products attached the best option for you.
Also, you’ll need to review the fees and charges associated with a home loan package closely to see if the annual package fee will outweigh the savings from having a discounted interest rate on your home loan or waived fees on products like bank accounts.
It’s important to pay attention to comparison rates when you’re looking at package home loans. While the idea of a discounted interest rate on your home loan might be enticing, the comparison rate – which estimates the total costs you’ll pay on your loan on top of the principal, plus other fees and charges – could tell a different story. Make sure you compare home loan package comparison rates to standalone home loan comparison rates to see if you really are getting a better deal.
If you do take out a package home loan, it’s still a good idea to keep observing interest rate trends and current home loan deals on offer by other lenders. This way, you can ensure your deal is still competitive, and if it’s not, you can consider refinancing so that you don’t overpay. While it may seem too difficult when all of your finances are with one lender, refinancing to get yourself a better deal doesn’t have to be a stressful task.
Are you thinking about getting a home loan package? Our friendly Home Loan Specialists are here to help you weigh up your options at a time that suits you – just book an appointment.
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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.
Tags: home loan, refinance, fixed interest, interest rate, variable interest, home insurance, offset account, package home loans, ongoing fees, new purchase
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# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 25 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria. Top rates include lenders who are on our panel and are then defined by the circumstances provided by the borrower.
The Lendi Group Pty Ltd, which is the ultimate holding company of the Aussie and Lendi businesses is owned by numerous shareholders including; banks such as CBA, 1835i (ANZ’s external venture capital partner) and Macquarie Bank, the Lendi founders and employees, and a number of Australian institutional investors and sophisticated investors including UniSuper.
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