Bankwest offers home loan with a loyalty reward

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Bankwest has introduced a new home loan that actually rewards its customers for loyalty.

The new Rate Cutter Home Loan gives an increasing rate discount for each year they keep the loan.

Admittedly Bankwest is not the first institution to take this approach - HSBC's Home Rewards loan is a similar offering and has been around for several years.

The Bankwest Rate Cutter home loan starts with a 0.40%pa discount off the Bankwest standard variable rate, currently 7.30%pa, which means the rate starts at 6.90%pa.

The rate is further reduced by 0.10%pa each year for the next four years to a maximum of 0.80%pa, which applies for the life of the loan. Bankwest estimates that a customer with an average $285,000 loan will save $5510 by the end of the first four years.

There is a $595 application fee but no ongoing monthly fees or penalties for early repayments. You can pay extra into your loan - either as a lump sum or by paying higher than your minimum monthly amount.

The good news is you will have access to these funds as the loan comes with a redraw facility. Better still, there is no minimum redraw if you redraw online and there is no redraw fee.

Another option is having a 100% mortgage offset facility linked to a Bankwest Zero Transaction Account. Having an offset facility will set you back $15 a month though.

The loan is available to home owners and investors; customers can pay weekly, fortnightly or monthly. New customers may borrow up to 90% of property value while existing home loan customers can borrow up to 95%.

MONEY VERDICT

The $15 offset fee may be a little steep but overall it's a good product with plenty of features and ideal for those who want to keep their loan for several years. Of course there are cheaper loans out there - and they start off cheaper - but they may not have all of the features.

You may also compare it with a package home loan which generally comes with a discount of up to 0.7%pa, but generally you have to borrow a fairly big sum to get the biggest discount.

And of course package loans have high annual fees. It's up to you to do some number crunching based on your needs.

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Maria Bekiaris is editorial campaigns manager for Canstar and former deputy editor of Money. She holds a Bachelor's degree in business.