What are basic loan products?
When speaking with your mortgage advisor you will need to make a range of decisions related to products, loan terms and repayment types however one of the other considerations which many borrowers can overlook are the no frills / basic loan products.
Some basic home loan products are a great “set and forget” facility where a borrower can save on annual package fees, monthly account fees and depending on the product, some other fees if they are not needing to transact frequently within that loan product. However if the borrower intends to use the loan account as a transactional type of facility then all fees / limitations should be considered to ensure that loan product is the most suitable.
Some of the considerations related to basic loan products can include:
- Is there an introduction rate which changes after a set term?
- What account fees will I need to pay for (e.g. monthly fees, redraw fees)?
- What loan establishment fees and discharge fees will I need to pay for?
- How much do I intend to transact in the loan account?
Many borrowers proceed with what’s known as a professional package product as this can offer a host of inclusions for an annual package fee. Some of these inclusions may be:
- No monthly fee
- Access to additional product features (e.g. offset account)
- Credit card
- Credit card with rewards points
- Frequent flyer programs
- Complimentary travel insurance
- Discounted insurance products (home, contents, personal, etc)
Depending on the requirements of the borrowers, the professional package fee may be a great option however there are basic and introduction specials commonly known as no frills loan products which can offer even better interest rates than the professional package products.
Before making any decision about what is most suitable for your needs, be sure to have an in depth conversation with your mortgage advisor and conduct a thorough product review.