3 ways to better your home loan – other than asking for the cheapest interest rate. Author: Con Koulouris The best home loan is the one with the cheapest rate, but is that all there is to it? Here are three questions to ask when looking for a home loan. We all know that getting the cheapest interest rate on your home loan is a good way to pay less. However, after you have looked for the lowest rate, what else can you ask for? In today’s competitive world, it is important to ask about extra features and understand how they can help you.

1. The first question to ask is: “Do you offer an offset account? And can I have more than one offset account linked to my loan?”

We recently helped a couple in Hawthorn refinance their home loan and showed them the benefit of bucketing their money to make managing their expenses easier. This was simple. We found a lender who allowed them to have multiple offset accounts linked to one home loan. Then we set up 4 accounts; an everyday account each individual, a utility account for all their bills, and a holiday account for their leisure. They now have all their savings offsetting their home loan, and are managing their money better.  

2. The second question is: “What other benefits does the bank offer me as a home loan customer?”

For example, some banks will offer a credit card as part of their home loan package. We recently had a couple form Doncaster who had 5 credit cards between them and were paying just over $400 in annual credit card fees. By refinancing to a bank that offered a credit card as part of their home loan package, they will able to cancel all their other credit cards and saved the annual fees.  

3. The third, and maybe most important question: “How long will it take?”

Understanding how long you can expect to be in debt is a powerful tool in reducing it. Many people believe they understand their home loan, but asking the right questions will help you pay it down quicker and save on interest. Understanding how much interest you pay each year, and how much principal you pay each year, can help you visualise exactly what it costs to have a home loan. Another tip is to ask your bank the date you will have your loan paid down to NIL. Stick this date up behind your bedroom door. Then each year ask the bank how much interest you paid, how much principal, and again the date the loan will be paid down to NIL. If you are actively trying to pay down your home loan faster that date should be reducing each year. If it is not, you need to ask why. At AMEGA Financial Solutions we educate our clients on how banking works, how a home loan works, and how to get most out of the benefits offered by their lender. This has helped our clients reduce their debt, and reduce it faster. If this is something you would like to know more about, make a time to speak to us.         General Advice Disclosure: This document contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information. Case Study Disclaimer: The Examples is illustrative only and is not an estimate of the investment returns you will receive or fees and costs you will incur.