Most lenders offer the choice of a basic loan or a home package loan.  The basic one tends to just be a simple, variable loan (sometimes fixed as well) with little or no ongoing fees and no added extras.  The home loan package on the other hand is usually their bells and whistles offering.  It is much the same as bundling your telco services.

When you package your home loan and bank account, you could enjoy the benefits of home loan package.  Pretty much every bank offers one of these.  They go under names like Mortgage Advantage, Premier Advantage, Choice, Home Package Plus, Professional Package.

Whatever they are called they general offer a range of discounts and savings across some of their products and services.

  • Discounts on a range of variable and fixed rate home loans
  • Usually reduces or waives establishment fees
  • Usually reduces or waives and ongoing maintenance fee, “top up / loan increase” fee, portability fee or switching fee.
  • Pay no monthly service fee on your linked offset account(s)
  • Waive the annual fee on a credit card
  • Discounts on selected insurance products
  • Bonuses and discounts on a range of wealth products.
  • Ability to hold multiple home loans under the one home loan package

Customers mostly select these loans because of the combination of interest rate savings, access to fixed rates, getting an offset account and the option of a premium credit card.  All of this comes with a package fee ranging from $200-400 per year.  The annual cost of the package is usually outweighed by the benefits gained across the suite of products.

Customers also quite often take out the home loan package so that they can bundle their services just like you bundle internet, home phone and mobile services.  In banking this could mean bundling together you home loan, credit card, savings and transaction banking under one roof.  It might not be the most cost effective solution but many like the neatness of a one-stop-shop.  It makes account transfers a breeze, you can see all your accounts at once online or in an app and you have only one bank to call if you have any problems.

On the flip side, we quite often we see customers come in with loans linked to offset accounts which come with an annual package fee of up to $400.  However, they are getting little or no benefits from it and sometimes even end up with a more expensive interest rate.  For instance, what use is an offset account if a customer has little savings to offset a loan with?  What use is a free credit card if is has high interest rates and doesn’t get paid off each month.  Or what use is a free credit card if you don’t want one?

Before offering or suggesting particular loan types we always check what your requirements are for a loan and any other banking needs.  We find out how you currently do your banking and ask if there are ways you could do it better.