What Is a Home Loan Package?🐾

1 June

This week’s Can I Beat Dave? was a photo finish.

While Dave and I were racing against the clock, I covered a question that comes up quite often:

“What is a home loan package?”

A lot of people have a package attached to their mortgage, but they’re not always entirely sure what they’re getting for the annual fee.

So let’s break it down.

What Is Included in a Home Loan Package?

A home loan package is a bundle of loan features and potential benefits offered by many lenders.

Instead of paying for certain features separately, they are grouped together under a package fee, which is usually charged annually.

Depending on the lender, a home loan package may include:

• an offset account
• discounted interest rates
• reduced or waived credit card fees
• insurance discounts
• fee savings on selected banking products

Not every lender offers the same package benefits, so it’s important to understand what is actually included.

How Does an Offset Account Work in a Home Loan Package?

For many borrowers, one of the biggest benefits of a home loan package is access to an offset account.

An offset account is a transaction account linked to your home loan.

The money sitting in that account can reduce the loan balance used to calculate interest.

For example, if you have:

• a $500,000 home loan
• and $20,000 sitting in your offset account

You may only be charged interest on $480,000.

Over time, this can help reduce the amount of interest paid, while still keeping your money accessible.

Do Home Loan Packages Include Credit Card Fee Waivers and Insurance Discounts?

Some home loan packages may also include extra banking benefits.

These can include things like:

• annual credit card fee waivers
• discounted insurance products
• reduced account fees
• package pricing across multiple products

These benefits can be useful, but only if you are actually using them.

A package may look attractive on paper, but the real value depends on your situation and how the features are used.

Is a Home Loan Package Worth the Annual Fee?

This depends on the numbers.

For some borrowers, the value of an offset account, rate discount, and fee waivers can easily outweigh the annual package fee.

For others, especially if they are not using the extra features, the package may not provide as much value.

The key question is:

Are the benefits you are receiving worth more than the fee you are paying?

That’s why it’s worth reviewing your loan structure regularly.

Should You Keep Your Current Home Loan Package When Refinancing?

Not always.

If you are reviewing your loan or considering refinancing, it is worth checking whether your current package still suits your needs.

A broker can help look at:

• the package fee
• the interest rate
• the offset account benefits
• the features you actually use
• whether another lender or structure may be more suitable

Sometimes keeping a package makes sense.

Sometimes a simpler loan may be a better fit.

What Is the Difference Between a Basic Home Loan and a Package Home Loan?

A basic home loan generally offers fewer features and may come with lower ongoing fees.

A package home loan usually includes more features, such as offset accounts and bundled banking benefits, but may come with an annual fee.

Neither option is automatically better.

It depends on what you need from the loan and whether the extra features help you save money or manage your lending more effectively.