How to save money on your home loan
Borrowing to purchase a home is probably one of the largest financial transactions most of us will make. It’s really important our customers get the right advice and the right products. For a better understanding, we sat down with Brisbane Regional Manager Dianne White who took us through some of the key ways our customers can save money on their Heritage Bank home loan.
How can customers save money on their home loan?
We have a number of ways that customers can save on their home loans—something as simple as making their payments in line with their pay cycle. If that was weekly or fortnightly, that would reduce the interest payable over the long term. And certainly with the long term, they could make additional repayments. We have total flexibility on all of our loan products with loan repayment. Should they receive a small windfall, whether it’s tax return, an inheritance, a lotto win, any of that can be applied to their home loan. And again they’re paying that directly out of the principal that will directly reduce the interest for them in the long term. Some of their loan products allow an offset account that also will help them to save money on their loan.
What are the benefits of having an offset account?
The benefit of having an offset account is that you can reduce the interest that’s payable on your home loan. The way that works is that you’d pay your salary, your wages or any other credit you might get into your account. Leave them in the account for as long as you can to offset against your loan balance. The way that offset works on a full offset is if you were to have a loan balance of $100,000, and today you have $10,000 in your offset account, we would apply the interest just against that net balance of $90,000.
How can you maximise the funds in your offset account?
Ideally, in order to maximise those deposits in your account, you would put most of your monthly expenses onto a Heritage Visa. We can set up an automatic repayment which ensures that would be cleared monthly by the due date so you wouldn’t incur any interest, thereby maximising the benefit of the funds sitting in your account, offsetting against your loan.
What are the benefits of having a larger deposit?
Having a larger deposit helps you in a number of ways. Firstly, the larger the deposit, the smaller the loan amount that you need to borrow. Clearly, the payments will be less; the interest will be less. But it also helps you in terms of the setup fees on the loan. Any loan, when you have less than a 20% deposit, we will insure that loan. We lend up to 95% of the purchase of a property. And that premium that is charged by the insurer is on a sliding scale. If you were borrowing 95% of the purchase price of the property, obviously that would be a larger premium than if you were able to borrow 85%. So clearly, it’s in your best interest the greater the deposit you can accumulate. That will definitely help you. Having said that, we do lend up to 95% of the purchase price of those properties.
What are the top features of Heritage Bank’s products?
If I was to nominate the top 5 features of our products, would be number 1. You have the ability to make additional repayments on all of your loans. We have a withdraw facility. We have an offset ability with a number of our loan products. And certainly our fixed rate options are some of the best. Remember, a house is one of the biggest and most important purchases you will make. Borrowing to purchase a home is probably one of the largest financial transactions most of us will make. So it’s really important that we get that right, we get the right advice and the right products. Here at heritage we have a very comprehensive and very competitive range of products. But we couple that with our award winning service by our expert home loan lenders.