Understanding Home Loan Features: A Guide to Saving Money

When choosing a home loan, understanding its features can save you thousands and provide flexibility that suits your busy lifestyle.

In this blog, we’ll explore key home loan features, how they work, and the unique advantages available to healthcare professionals.

Essential Home Loan Features Explained

Offset Account

• What It Is: A savings account linked to your loan, reducing the interest you pay by offsetting your loan amount.
• Why It’s Great for You: Doctors often receive lump-sum payments like private billings or bonuses. Parking these funds in an offset account lowers your loan interest while keeping your money accessible for emergencies or investments.
• Quick Example: If your loan balance is $300,000 and you have $20,000 in an offset account, you only pay interest on $280,000.

Redraw Facility

• What It Is: Access extra repayments you’ve made on your loan.
• Why It’s Great for You: Nurses who frequently work overtime can benefit by paying extra during high-income periods and redrawing funds for unexpected expenses. This offers flexibility without resorting to credit cards or personal loans.
• Quick Example: If you’ve paid an extra $10,000 on your home loan, you can redraw that amount when needed while still saving on interest.

Split Loan

• What It Is: Splits your loan into fixed and variable portions.
• Why It’s Great for You: Fixed rates provide predictable repayments, ideal for managing family budgets. Variable rates allow flexibility for additional repayments or benefitting from rate drops.
• Quick Example: Fix half of your loan for certainty, while the other half takes advantage of potential rate reductions.

Additional Repayments

• What It Is: Allows you to pay more than the required amount, reducing your loan term and interest.
• Why It’s Great for You: Healthcare professionals, such as locum doctors or agency nurses, with fluctuating incomes, can use high-earning periods to make lump-sum repayments, saving significantly over the long term.
• Quick Example: Paying an extra $200 per month on a $400,000 loan could save you thousands in interest over time.

Changing Repayment Periods

• What It Is: This strategy involves paying your loan repayments fortnightly instead of monthly.
• Why It’s Great for You: With 26 fortnights in a year, you effectively make one extra month’s worth of repayments annually without feeling the financial strain.
• How It Helps: This reduces your loan balance faster, saving you thousands in interest over time while keeping repayments manageable.
• Quick Example: A monthly repayment of $3,000 becomes $1,500 fortnightly. Over the year, you’ll pay $39,000 (instead of $36,000), accelerating debt reduction and cutting down your total interest.

Utilising Salary Packaging

• What It Is: A tax-effective arrangement allowing you to use pre-tax income for home loan repayments.
• Why It’s Great for You: Healthcare professionals employed by eligible organisations can package expenses, reducing taxable income and increasing take-home pay.
• How It Helps: Salary packaging maximises disposable income while minimising tax obligations, providing more funds to reduce your loan.
• Quick Example: Someone working in Allied Health earning $100,000 could salary-package $10,000 towards their loan, effectively lowering taxable income to $90,000. This not only saves on tax but helps repay the loan faster.

How to Choose the Right Features for You

Each healthcare professional’s financial needs and goals are unique.

Whether you’re a nurse looking for repayment flexibility or a doctor seeking long-term savings, our expert mortgage brokers specialise in helping you find the perfect loan features to suit your needs.?

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