Home loan features in a nutshell

There are plenty of home loan features to get excited - and confused - by, and as they almost always involve extra costs (typically, a higher interest rate), be very sparing and only take up features you'll definitely make use of. Search mortgages and toggle on or off the features you're interested in. These are what we're talking about:

Extra repayments home loans

Extra repayments will knock off your home loan faster.

• Some mortgages don't allow them
• Others allow them, but charge a fee
• Still others allow extra repayments, fee free. This usually involves a higher interest rate - but paying off your home loan faster will result in significant savings across the total cost of the loan.

Redraw home loans

Extra repayments on your home loan, plus the facility to draw against this extra balance.

• Extra repayments will cut the interest earned. This can incur a fee to activate, as high as $300. Some mortgages allow a certain number of repayments / redraws each year. Other mortgages have minimum or maximum redraw amounts
• Flexibility of withdrawing these extra funds

Offset account home loans

An offset account is attached to your home loan, and is typically a transaction account, possibly with a debit or EFTPOS card. The beauty of this feature is that the balance of the offset account is deducted from your home loan debt for interest purposes.

• If you consistently have $5000 in your offset account, and a home loan rate of 7%, you'll save $350 annually.

No exit fees home loans

There are various kinds of exit fees, with all sorts of names:

• early exit fees
• break fees
• termination fees
• deferred establishment fees
• early repayment fees

Every mortgage has different conditions, usually relating to how early in the mortgage period you wish to exit.