- 11 Jul, 2017

Structuring Your Loan for the Best Results

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When it comes to managing money well, you need to be vigilant. Sure, we can all be a little lazy at times. But, this can be costly when it comes to your home loan. So, it’s important to check if you’ve made to most of your banking and mortgage. Doing this could shave years off your home loan term. Plus, it could save you more overall.

Account consolidation

Many of us have more than one bank account with more than one lender. However, this could be costing you more. Why? Well, most banks offer package deals. These packages put all of your everyday banking needs in the one place. As such, you can then take advantage of discounts and other offers.

What are the benefits of a banking package?

  • Simplifies your banking.
  • Reduces annual fees.
  • Gives you discounts on home lending.
  • Lessens the cost of insurance.
  • Cuts annual credit card fees.

Home Loan Rates

Mortgages come with many options. Fixed or variable rates are two of the most common. Finding the right one for you is as simple as weighing up the pros and cons.

What are the pros of a fixed loan?

  • Rates don’t change for the specified term.
  • Repayments are easier to manage.
  • Budgeting becomes easier.

How can a fixed loan disadvantage me?

  • Limits apply to extra repayments.
  • Extra home loan features such as a redraw and offset are not available.
  • Falls in interest rates won’t apply to you.
  • Break fees may result if you sell your home.

What are the advantages of a variable loan?

  • Making extra repayments is easy.
  • More home loan features are available.
  • Switching loans is easier.
  • Greater loan flexibility.

What cons does a variable loan have?

  • Interest rates can change.
  • Repayments fluctuate with the market.
  • Makes budgeting harder.
  • Increases mortgage stress.

Direct Debit

One of the easiest ways to pay your mortgage is via direct debit. Therefore, if your lender hasn’t set this up, then it’s time to ask them. Once setup, it’s then important to check the repayment is correct and coming out of the right account. Just remember that lenders don’t always get everything right.

Why is direct debit of benefit?

  • Simplifies the repayment process.
  • Maximises time and effort.
  • Cuts down stress.

Increase Payment Frequency

As crazy as it sounds, paying the same amount off your loan, but more often, will reduce your interest. How come? Well, paying more frequently reduces your principal faster. In addition, you’ll make an extra month’s repayment as there are 52 weeks in a year or 13 lots of 4-weeks.

How can I reduce my interest?

  • Pay weekly or fortnightly.
  • Slightly increase your repayments.

100% Offset Maximisation

Linking your everyday bank account to a home loan offset account reduces your interest. All you need to do is ask your lender to set it up.

How does an offset account work?

  • Deposit all your income into your offset account.
  • The loan principal reduces by the amount held in the offset account.
  • Interest is payable only on the principal, less your account balance.

Redraw Setup

A redraw facility allows you to make extra home loan repayments. This money keeps in trust. So, if you need it, you can withdraw it.

How does a redraw help me?

  • Make extra payments when money is available.
  • Your loan principal reduces, and you pay less in interest.
  • Withdrawal is available if needed.

You deserve the most affordable and efficient mortgage. So, contact eChoice and find out how our brokers can help. We have access to over 25+ lenders and 100’s of products.


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