How to Select a Lender Part 2: Products/Services
In Part 1, we discussed the differences between banks and their attitudes toward lending. Here, we turn our attention to the different products and services lenders and banks can offer their customers, alongside their home loan options. Fundamentally, to answer the question of which lender you should choose, you need to identify what they’re able to offer you, and it’s here that a solid understanding of products and services is important.
What are the most useful products and services a lender can offer?
Offset - An offset account is an extremely useful, but underutilized feature that comes alongside a home loan. Put simply, any money in an offset account reduces the interest that would normally be added to the loan over a period of time. If you’re being charged 2% per month on $1,000, your interest charge for that month would be $20 dollars. But, if you had $700 dollars in your offset account, you would only be charged 2% on $1000 - $700 = $300 dollars, taking your interest charged to $6 dollars. This means that you can use the funds freely, but they are always working behind the scenes to help you pay less on your home loan. Customers who have a solid income and savings habit will love offset accounts, as they afford flexibility in using money, while still giving a risk-free way to take advantage of your savings and make them work toward your long-term financial goals. For more information on offset accounts, please see our article Offset Account & Redraw
Packages - Loans are complicated beasts. Packages are lenders’ answers to simplifying the process. Packages such as ANZ’s Breakfree package or Westpac’s Premier Advantage package are fancy words for a simple concept: charging a simple annual fee and providing discounts and extra features in return. Access to a package usually comes with an offset account on variable rate loans, and some lenders on our panel even have access to offset with some fixed-rate options. Furthermore, most lenders will provide the option of a free credit card and some even provide insurance, all incorporated within this simple annual fee. For more information, contact Lite Financial to discuss your lending needs.
Security swaps - More seasoned property owners with multiple assets will often have complex sets of loans attached to different houses. Security swaps are offered by some lenders, who are able to simply and efficiently change which loan is connected to which house.
Business banking - Small business owners will often need to charge for their services, which is where bigger banks shine; they offer the ability to access merchant facilities with EFTPOS machines along with business bank accounts, and it’s often beneficial to have your business banking in the same place as your home loans, to simplify future borrowing. Some lenders on our panel won’t charge fees for their business banking accounts.
In summary, products and services are some of the major points of difference between lenders, and it’s important to have a great grasp of what is important to you as an individual consumer before committing to a specific bank. A great rate is good, but having a better understanding of what your goals and needs are as an individual and what products and services will best support you in meeting them is better. For assistance in determining what lender will provide the best combination for your given situation, contact Lite Financial for a free consultation.
Information Disclaimer:
Any advice provided is general and does not take into account individual objectives, financial situation and needs. All individuals should consider whether the advice is suitable for them and their personal circumstances.
