Perfect match: which home loan feature is for you?


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Finding the right home loan is like finding the right partner, writes Gateway Credit Union CEO Paul Thomas. What are you looking for?

Anyone who has taken out a mortgage or is about to take out a mortgage understands that choosing the right home loan is more than just picking a great rate.

The additional features are often what will make a home loan the perfect match.

With plenty of terms thrown around like 'redraw facility' and 'offset account' it's understandable why many consumers are unsure what are the best features for them.

In honour of Valentine's Day, now is the perfect time to work out which home loan features will make your ideal match.

Feature Description   Ideal match
Split home loan facility A split home loan facility allows you to get the best of both worlds by enabling you to fix a portion of your loan, whilst keeping another part variable. Thereby, offering the dual benefit of protecting you against sudden rate rises but also allowing you to take advantage of current low rates. A flexible lender will allow you to choose what portion of your loan you would like to fix and what portion you would like on a variable interest rate. You can split your home loan at any time - during the application process or after funding.   If you're indecisive in nature this feature is the one for you. You won't feel like you're missing out by being forced to choose.

Allowing you to get the best of both worlds; control with flexibility, this feature also suits those that like to do things their way.

Redraw facility A redraw facility helps you create greater security by offering you a financial safety net. Extra repayments you make on a variable rate home loan are considered accessible funds. These funds are available for you to 'redraw' for any purpose or an emergency.   If you like security then a redraw facility is a great option for you. Life can be unpredictable and can often take unexpected turns. This feature often suits young couples who have several life milestones ahead of them such as marriage or having children.

The flexibility that a redraw allows also makes it a good option for those who are spontaneous and don't often run to a plan, giving you freedom to be impulsive.

Offset account An offset is a transactional account that is linked to your home loan. The credit balance that sits within your transactional account is offset against your outstanding loan balance. For example, if you have $300,000 owing and $30,000 in your 100% offset, you only pay interest on $270,000. Even if you have a smaller amount sitting in your offset, over time you can make significant interest savings. Offset accounts can help you to reduce the interest you pay as well as the term of your loan.   An offset account speaks most to those that love to plan and save. It's almost as though you're being rewarded for your good habits. To boot, the accessibility of the offset account means you still have room to move should unexpected costs arise.
Rate lock Interest rates can change from the time you apply for a loan to when it's funded. Rate Lock guarantees your chosen fixed rate for an agreed period of time and is a good option for buyers who haven't yet found a property. There are usually fees associated with this product so make sure you get all the facts.   This feature is for the people that love consistency and stability. If volatility causes you anxiety then this feature will give you the peace of mind you seek.
Additional repayments Additional repayments are the payments that are above your home loan's minimum repayments. If you choose a fixed rate home loan you may not be able to make extra repayments without incurring an additional cost so be sure to be aware of any limits or restrictions.   If you love to set yourself a goal and find the quickest way to achieve it, then additional repayments are right up your alley. For anyone wanting to pay off their home loan as soon as possible, this feature is a must.
Bridging loan A bridging loan is generally an interest-only loan that lets you purchase a new property while you wait to sell or receive proceeds from the sale of your existing property.   If you are all about hassle-free, then bridging loan is something you might want to consider. The ability to tide you over and give you some breathing space makes buying and selling a house much easier. This feature is especially suitable for those that are prone to shift houses often.

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