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Home loan facilities: How can these help you save money in the long-term?

By Andrew Bell

Taking out a home loan is almost certain when it comes to purchasing real estate in Surfers Paradise. Unless you're exceptionally lucky, you'll need to seek some financial assistance to make your property goals become a reality. Home loan products are extremely flexible things and can often be moulded to suit your specific needs for the future. 

Therefore, before committing to any one product, take the opportunity to look around and investigate the various options and facilities available to you. Depending on your buying motivations – whether its for investment or owner occupation – and a variety of other factors, you may be able to find a product that could end up saving you money in the long run, or even help you cut down on the amount of time spent making repayments. 

Here are some of the common home loan features that you should investigate for your own mortgage product, which could make your real estate experience more enjoyable. 

Offset account

One of the first additions to consider for your home loan is an offset account, which can help you to save money on your home loan repayments over the lifetime of your mortgage. Not only this, but you can also cut down on the amount of time paying off your mortgage with an offset account, which allows you to utilise your savings in order to cut down on the amount of interest you pay on your home loan. 

Any money in your offset account is deducted from your mortgage's principle amount before interest is calculated, reducing the level of interest you're charged at any given time. For example, if you have a mortgage balance of $400,000, but have an offset account with $50,000 in it, you will only be charged interest on $350,000 of your mortgage. 

The benefits of this are immediately recognisable. Having a significant amount of funds in your offset account can do wonders for your mortgage repayments, allowing you to save money on interest repayments, which can be put towards paying off more mortgage principle or – for future benefit – put directly into your offset account. 

A popular way of maximising the benefit earned from an offset account is for people to have their income go directly into it every payday, as well as making their offset their primary savings account. This helps you get the most out of your finances without too much maintenance needed in the long run. 

Redraw facility 

Another way to make your funds work for your future is a redraw facility, which can be a wonderful way to get ahead with your repayments while still retaining complete control over your money. The basic concept of a redraw facility is that a homeowner can make extra repayments on their home loan – that is, larger contributions than necessary – to help knock down the overall principle of the mortgage.

This not only reduces the overall remaining amount owed, but also alters how much interest can be charged on the loan. However, the redraw works like a savings account, allowing homeowners to take out any extra repayments made should the need arise. 

Utilising this facility effectively makes your mortgage another account for you to use, while also making huge savings in interest in your home loan repayments. Of course, there are a number of limitations with these facilities – some lenders only allow a certain number of redraws per year, or limit the amount you're allowed to take out – so it's important to discuss these options with your lender before committing. 

But these are just two of the home loan options that can be adopted to help you make the most of your money and get your mortgage paid off as fast as possible. 

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