Should I get a basic home loan?

Any general questions you might have in regards to loans and finance.
Post Reply
Gaskell
Posts: 48
Joined: Thu Jul 04, 2013 4:44 pm

Should I get a basic home loan?

Post by Gaskell »

Hi everyone!

I am thinking of buying my first house. I will obviously have to take out a home loan for that, and I want to pay as less as I can in interest. My old man was telling me that I should consider getting a basic home loan if I want to pay less in interest.

I do not know much about home loans so I would be grateful if someone could provide me more info on basic home loans. Comparison with other types of home loans would be highly appreciated.

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Should I get a basic home loan?

Post by Otto Dargan »

Hi and welcome to the forums Gaskell.

It may be cheaper for you to get a basic home loan as compared to other types of home loans. You give up the flexibility in return for a lower interest rate, lower or no ongoing fees, and a reduced or waived application fee when you take out such a loan.

This type of loan may be suitable for you if you want a simple home loan that is easy to use. You will not be able to get additional features such as an offset account, repayment holidays, ATM card, cheque book, or electronic bill payment facilities with a basic home loan.

Although different lenders have different interest rates and fees, all major lenders offer similar features for a basic home loan. Different lenders may give different names to basic home loans. Some of the basic home loan products offered by different lenders are as follows:
  • CBA - Three year special ratesaver
  • ANZ - Simplicity plus
  • NAB - Base variable
  • Rams - Basic home loan
  • Westpac - Flexi first option
  • St George - Basic home loan
  • Suncorp - Back to basics
Basic home loans are more suited in following conditions:
  • The loan amount is under $250,000: You may be able to get an interest rate lower than the standard variable rate with a basic home loan even if you are unable to get a professional package discount.
  • You don’t need extra features: If you will not be making use of the features such as a credit card, it makes no sense paying for the annual fees of a professional package.
  • You don’t want to change your bank: Some loan products offer you features such as a cheque account and credit cards. If you have no plans on changing your bank then there is no point of paying for these additional features.
  • Simplicity in money matters: If you find it complicated to deal with your money then a basic home loan gives you a simple and easy to use solution.
Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Gaskell
Posts: 48
Joined: Thu Jul 04, 2013 4:44 pm

Re: Should I get a basic home loan?

Post by Gaskell »

Thanks for the information. I think a basic home loan may be a suitable option for me since I do not really want to switch banks. Could you tell me about the advantages of getting a professional package as well? I do not want to miss out something and regret the decision later.

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Should I get a basic home loan?

Post by Otto Dargan »

Hi Gaskell,

A professional package is a loan that may be suitable for people who are borrowing a large amount, usually over $250,000. Lenders usually charge an annual fee of about $300 to $400 for a considerable interest rate discount as well as discounts on features such as a cheque account, insurance, and credit card facilities.

Lenders may offer you interest rate discounts up to 1.10% on a variable rate, and up to 0.25% on a fixed rate. You may be able to get larger discounts for larger loan amounts over $750,000 or $1,000,000. Other fees associated with your loan such as application fee, switch fees, extra valuation fees, and loan split fees may also be waived.

You may be able to have a free offset account associated with a professional package which will help you to pay less interest.

If you would like to know more about these then you can check out our website. We can also be reached on 1300 889 743 or you can fill in our free assessment form to see if you qualify for a loan or not.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Gaskell
Posts: 48
Joined: Thu Jul 04, 2013 4:44 pm

Re: Should I get a basic home loan?

Post by Gaskell »

Thanks for the reply, Otto. I will need to think more about this.

User avatar
totoro
Posts: 48
Joined: Wed Jun 17, 2009 4:58 pm

Re: Should I get a basic home loan?

Post by totoro »

Hi everyone,

I am also unsure about which home loan is suitable for me, and I learned a lot from this thread. Could someone tell me what an offset account is?

User avatar
Otto Dargan
Mortgage Specialist
Posts: 7729
Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
Contact:

Re: Should I get a basic home loan?

Post by Otto Dargan »

Hi totoro,

An 100% offset account can also be used as a cheque account. It is a separate account that is linked to your home loan. However, instead of earning interest on the funds of your offset account you are able to save interest on your home loan. This is better for you since the interest rate charged on loans are far higher than the interest offered on your savings.

Cheers,
Otto
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

User avatar
totoro
Posts: 48
Joined: Wed Jun 17, 2009 4:58 pm

Re: Should I get a basic home loan?

Post by totoro »

I see… Thank you for the explanation. Cheers, mate!

Post Reply