Many loan options
When shopping for a home loan, there are so many options on the market that it can be quite confusing. One of those options is a home loan package. Usually a bank offers these types of packages and offers a way to use some of the bank’s services at a discounted rate. What the bank offers is a mortgage loan and they add some financial products. Maybe a credit card and / or transaction account with no fees.
These packages are quite attractive to buyers. Banks ensure the popularity of their packages by offering at least three products, usually the minimum necessary to be eligible, to add to the home loan.
sweeteners
It’s a competitive market, particularly for banks that feel they dominate the home loan market, so they can hang the proverbial carrot on that home loan interest rate discount. Because they have you on board, don’t be surprised to see more discounts added to your credit card interest rate, lower account fees, and while you’re there, you might as well take your deeply discounted home and content insurance. . It’s about savings.
The level of discount to be offered varies between financial institutions, so it’s critical to understand the pros and cons and weigh it based on your circumstances.
PROS
All in one place
If you have had a few different accounts and cards with multiple institutions, it will be much more convenient and manageable to have all your banking with one lender. Since the lender has likely offered you savings on accounts, cards, and your mortgage, it would not make much sense to have higher rate accounts and cards or transaction costs with other institutions.
More discounted products
As mentioned, the top four banks own a large share of the existing mortgage market and that gives them the ability to offer these packages that smaller lenders have a hard time competing against. If you are looking to obtain a home loan with a mortgage company or credit union, they usually offer products that they specialize in.
High income
For high-earners, deal packages will help build capital much faster in a clearing account. Interest savings can be worked through a combination of making the salary lower the interest charge and living off the credit card. Just remember to pay for the card every month!
CONS
Locked in
It is not always easy to navigate when you are paying a mortgage. Rises in interest rates, changes in credit policy and, on a personal level, problems that make repayment difficult. Also, someone offers a better deal. Getting out of a home loan package can incur costs. In fact, those costs can make switching to another lender unattractive.
The fare
Don’t be fooled into thinking that discounts on financial products will save you close to the savings you would get with a lower mortgage rate. Payments over 30 years add up to an astronomical amount of interest. Saving a couple of dollars per transaction or having a lower credit card rate won’t come close to that. While discounted mortgage rates may sound attractive, talk to a mortgage broker or use an online mortgage calculator to compare basic mortgage rates.
Keep it simple
You may be better off getting a simple home loan and not being drawn in by the bells and whistles of special packages. Technology these days means accessing your loan account online and using a redirect feature (if applicable) to pay off the mortgage faster, saving significant interest, or if you need additional funds, withdraw from that account.
Cost?
Verify that the offer package does not have something like an annual fee. If you have an annual fee, find out if overall savings on lower interest rates over the life of the loan make it better.
Here to help
If you don’t have the time to do a lot of research, using the services, knowledge, and experience of an experienced mortgage broker is a great way to get the information you need and the best home loan for your budget and circumstances. Mortgage broker services are free and personalized service is an added bonus!