This is the third article in a series of articles on home loans in Australia.  These articles intend to provide you with some Mortgage News and information that can help you decide which home loan is best for you. We will continue the series by providing information on various home loan products available today.

Lines of Credit

Over the past few years lenders have been inventing flexible products to entice customers to do business with them. A popular flexible product that has emerged from this competitiveness is the line of credit mortgage.

This type of product can best be described as a credit card with a lower interest rate secured against your home. It will have an interest rate similar to those of other mortgages. This is in contrast to rates offered on other credit products, such as credit cards and personal loans, which can be quite high.

A line of credit home loan allows for great flexibility. Borrowers can make over payments whenever they like. They can also draw down funds as they wish up to a predetermined limit. As long as the loan does not exceed the upper limit, the borrower can use the line of credit as they choose to.

Borrowers can have their income paid directly into the Mortgage By doing this the you can reduce the amount of interest payable and save money. Disciplined borrowers could save a large amount of money over time if they did not draw down on their loan at all. This is because every unused dollar earned would sit against the home loan each day instead of sitting in a savings account.

Home owners who are looking for maximum flexibility with their home loans have flocked to line of credit mortgages, making them a popular product.

Professional Package Mortgages

For borrowers who have lots of different loan products and would like to save some money, a professional package might be the answer. Several loan products can be bundled together in these packages, helping the borrower to save on fees and interest charged.

Lenders benefit from these packages by making sure you have as many loan products as possible with them and not their competitors. This is why they can offer discounts on fees and interest and still make a profit.

If you have a mortgage within a professional package you might still be able to get flexible options such as offset accounts.

You should be aware that professional packages charge high annual fees. There will usually only be one fee and it will cover all products in the package. The savings made through reduced interest and fees payable therefore need to be more than the cost of the annual fee payable, otherwise it is not worth taking out the package.

Care must be taken to calculate the costs and benefits of professional packages before applying for one. It could be that you’ll save more money with a line of credit mortgage instead. The trick is, of course, to make sure you do your sums before signing up.