A home loan review can involve more than looking at the interest rate. Fees, loan features, repayment flexibility, offset and redraw arrangements, refinancing costs and the remaining loan term can all affect the overall cost of a loan.
The benefit of a loan feature depends on the product terms, how it is set up and how it is used. Checking these details can help you understand your current arrangements and identify questions to raise with your lender or mortgage broker.
At PictureWealth , our team of Lending Specialists can provide credit assistance and compare available home loan options from our lender panel. We don't compare every lender or product in the market, and any recommendation is subject to an assessment of your requirements, objectives and financial situation.
PictureWealth Lending can help you understand and compare available loan options from its lender panel based on your current circumstances, situation and eligibility.
A mortgage offset account is a transaction account linked to an eligible home loan. Depending on the product terms, some or all of the account balance may reduce the loan balance used to calculate interest.
For example, with a correctly linked full-offset account, a $600,000 loan and a $40,000 offset balance would generally result in interest being calculated on $560,000 while that balance remains in the account. Partial-offset arrangements and other product conditions can produce different results.
An offset mortgage can be useful if you keep a regular savings balance and want that money to reduce home loan interest while staying accessible. It may be less useful to you if the account has higher fees or a higher rate and you do not keep enough money in offset to make the feature worthwhile.
Recent public reporting has highlighted cases in which some borrowers were reportedly charged additional interest following offset account errors.
A practical check includes confirming that the account is linked to the correct loan, whether it provides a full or partial offset, how interest is calculated, and whether fees or a higher rate affect the feature's value.
An offset account generally keeps funds in a separate transaction account. Its eligible balance may reduce the amount used to calculate interest. Use the Home Loan Offset calculator to estimate what interest you could save with an offset account. Results depend on the assumptions entered and do not represent guaranteed savings.
A redraw facility allows access to eligible additional repayments already made to a loan. Access rules, fees and withdrawal restrictions differ between products, and redrawing funds may increase the interest paid.
Moneysmart provides more information on how redraw, offset accounts and extra repayments may help borrowers pay off a mortgage faster, depending on the product terms and the borrower's circumstances.
The lowest advertised rate is not necessarily the lowest-cost or most appropriate loan. A product with a lower rate may have higher fees, fewer features or tighter repayment restrictions. Another product may have a higher rate but features that are more relevant to the borrower.
Consider the advertised interest rate, any disclosed comparison rate, repayments, fees, loan term, offset and redraw conditions, extra-repayment limits, fixed or variable features, discharge costs and other switching costs.
Moneysmart's guide to choosing a home loan explains why it is useful to compare fees, features and flexibility. Its mortgage calculator can illustrate repayments under different assumptions, but the results are estimates rather than quotes or approvals.
We break the different types of loans down in our guide here.
A comparison rate combines an interest rate with prescribed fees and charges into a single percentage based on a standard loan amount and term. It can help consumers compare the indicative cost of different loans.
A comparison rate does not include every possible cost and may not reflect the cost of a loan for a particular amount, term or set of circumstances. Government charges, early payout costs and some conditional fees may not be included. It should be considered together with the loan's features, conditions and other costs.
Refinancing means replacing an existing mortgage with a new loan from the current lender or another lender. Borrowers may explore refinancing to seek different rates, repayments, features or loan structures.
Before switching, consider application and valuation fees, discharge costs, fixed-rate break costs, changes to offset or redraw features, and the remaining loan term. Extending the term may reduce repayments but increase the total interest paid. Using home equity or consolidating other debts can also increase the debt secured against the property.
You can explore PictureWealth's home loan support and lending calculators to understand illustrative structures and repayment scenarios. Calculator results are estimates only and depend on the assumptions entered. Our team can help you asses your situation, understand your current set up, and see if there's an opportunity to refinance. Reach out here.
A variable rate can rise or fall over time. Variable loans may offer features such as additional repayments, redraw or offset access, but the available features and conditions differ between products.
A fixed rate applies for a set period and can provide repayment certainty during that period. Additional repayments may be limited and break costs may apply if the loan is refinanced, repaid or the property is sold before the fixed term ends.
A split loan combines fixed and variable portions. Each portion remains subject to its applicable rates, fees, limits and risks.
The RBA cash rate target provides information for interest rates, but an individual loan review should consider the current loan terms and the borrower's circumstances.
Useful questions include:
PictureWealth's home loan calculators can estimate potential repayments, comparison scenarios, borrowing power and potential refinance savings. Results are estimates only, may not include every cost, and do not represent approval, an offer or guaranteed savings.
Reviewing a home loan can help identify whether its costs, features and structure continue to meet a borrower's requirements and objectives.
At PictureWealth, our team of internal Lending Specialists compare options from a panel of 40+ lenders. They can help you review your current loan, compare rates and features, understand refinancing costs, and manage the process from application through to settlement.
Speak with the PictureWealth Lending team.
What is a mortgage offset account?
A mortgage offset account is a transaction account linked to an eligible home loan. Depending on the product terms, some or all of its balance may reduce the loan amount used to calculate interest.
What is refinancing a home loan?
Refinancing replaces an existing mortgage with a new loan from the current lender or another lender. It can involve benefits and costs, and a lower repayment may not reduce the total cost if the term is extended.
Is refinancing always worth it?
No. The outcome depends on the new rate, fees, features, remaining loan term, switching costs and the borrower's circumstances.
Can PictureWealth help compare home loans?
PictureWealth Lending can provide credit assistance and compare available loan options from its lender panel. It does not compare every lender or product in the market, and any recommendation is subject to an individual assessment.
Important information
This article contains general information only and does not take into account your objectives, financial situation or needs. Consider whether the information is appropriate for you before acting on it.