Home loan features are tools built into modern mortgages to help you reduce interest, manage cash flow, and pay off your loan sooner.
The most useful features include redraw, offset accounts, extra repayments, loan splits, and professional packages. Not every feature suits every borrower.
The right mix depends on how stable your income is, how disciplined you are with money, and whether your loan is owner-occupied or an investment.
What Are Home Loan Features And Why Do They Matter?
Home loan features are optional tools attached to a mortgage that give you more control over repayments, interest costs, and access to funds.
Used correctly, they can save tens of thousands in interest. Used incorrectly, they can increase costs or encourage poor spending habits. In plain terms, home loan features can’t change your loan balance, but they can change how you manage your loan.
Which Home Loan Features Are Most Common In Australia?
The most common home loan features include redraw, extra repayments, offset accounts, loan splits, interest-only periods, professional packages, and rate locks.
Not all features are available on fixed-rate loans, and some come with extra fees.
Quick Overview
- Redraw facility
- Extra repayments
- 100% or partial offset accounts
- Loan splitting (fixed + variable)
- Interest-only repayments
- Line of credit
- Professional package discounts
- Rate lock
- Loan portability and variations
What Is Redraw And How Does It Work?
A redraw facility lets you withdraw extra repayments you’ve already made on your home loan. If you pay more than the minimum, those additional funds remain accessible and can be redrawn later, subject to lender rules and fees.
Example: Pay an extra $200 per month and after 12 months, you can redraw $2,400.
Good For
- Emergency buffers
- Short-term savings goals
Watch Out For
- Redraw fees
- Limited or no redraw on fixed-rate loans
How Do Extra Repayments Help Pay Off A Home Loan Faster?
Extra repayments reduce your loan balance faster, which lowers the interest charged over time. You can make them regularly via direct debit or irregularly when you have spare cash. Most variable loans allow this; fixed loans often don’t.
Key Point: Every extra dollar reduces future interest, not just your balance.
What Is A Professional Package And When Is It Worth It?
A professional package bundles multiple banking benefits under one annual fee. It’s usually worthwhile for larger loans or borrowers with multiple products, as the interest rate discounts and fee waivers often exceed the annual cost.
Typical Professional Package Benefits
- Waived application and valuation fees
- Discounted interest rates
- No monthly loan fees
- Free or discounted credit cards
- Discounted insurance
- Priority servicing
A professional package is best suited for loans over $250,000 and borrowers borrowing over $1 million seeking negotiated discounts
What Does Interest-Only Mean And Who Should Consider It?
Interest-only repayments mean you pay only the interest charged each month, not the loan principal. This keeps repayments low but doesn’t reduce your debt unless you make extra payments. Periods usually last up to five years.
Some common use cases include:
- Property investors managing cash flow
- Short-term affordability strategies
Risk: Your loan balance doesn’t shrink unless you act.
What Is A 100% Offset Account And Why Is It So Powerful?
A 100% offset account reduces the loan balance used to calculate interest by the amount of money in the account. You still access your cash like a normal bank account, but every dollar offsets interest without locking funds away.
Here’s a simple example:
- Loan: $300,000
- Offset balance: $10,000
- Interest charged on: $290,000
Why Borrowers Love Offset Accounts
- Saves interest daily
- Full access to your money
- Often better for tax outcomes than redraw (especially for investors)
What Is A Partial Offset And How Is It Different?
A partial offset only counts part of your offset balance against your loan. For example, with a 50% partial offset, $100,000 in savings reduces your interest by only $50,000, not the full amount.
Tip: Partial offsets are cheaper but far less effective than 100% offsets.
What Is Loan Splitting And Why Do People Use It?
Loan splitting divides your mortgage into multiple accounts, often part fixed and part variable. This lets you manage risk, make extra repayments on one portion, and keep borrowing for different purposes clearly separated.
Here are some common uses of loan splitting:
- Fixed + variable rate protection
- Separating investment and personal debt for tax clarity
What Is A Line Of Credit And When Does It Make Sense?
AA line of credit lets you borrow up to a set limit and access funds anytime, paying interest only on what you use. It offers flexibility but often comes with higher rates and makes overspending easier.
| Feature | Line Of Credit | Offset Loan |
|---|---|---|
| Access To Funds | Instant | Via Savings |
| Interest Rate | Higher | Standard |
| Overspending Risk | High | Lower |
| Best For | Advanced users | Most Borrowers |
What Is Loan Portability And Who Benefits From It?
Loan portability allows you to transfer your existing home loan to a new property when you move. It usually requires same-day settlements and lender approval but can help you avoid reapplying for a new loan.
What Is A Repayment Holiday And When Should It Be Used?
A repayment holiday lets you pause or reduce repayments for a short period, usually up to six months. Interest continues to accrue and is added to the loan balance, increasing long-term costs.
Common Scenario: Maternity leave or temporary income reduction.
What is A Rate Lock And Is It Worth Paying For?
A rate lock lets you secure a fixed interest rate for 15 to 6-0 days while your loan settles, and this protects you from rate rises. Fees are often up to 0.20% of the loan, though some lenders offer free rate locks.
Which Features Suit Which Situation?
- If you have stable income and savings: Use a 100% offset + extra repayments.
- If you’re worried about rate rises: Use loan splitting (fixed + variable).
- If you’re an investor: Use interest-only + offset and avoid redraw for tax clarity.
- If you struggle with discipline: Avoid lines of credit and redraw-heavy setups.
Find Out More
Our mortgage brokers are passionate about helping you make the right choices with your home loan.
If you aren’t sure which loan features you need or need more information about other loan features not listed here, then please contact us and we’ll help you to decide.