Paying an annual package fee on your loan? Is it worth it?

Insights, Loan basics

Paying an annual package fee on your loan? Is it worth it?

Oktay Sengoz

|

25/10/2022

|

1 min read

Many lenders will offer you a basic (no frills) home loan or a full-featured home loan with an annual package fee.

The basic home loan interest rate is usually lower and does not come with fees, however the full-featured option will set you back between $199 to $395 every year.

What’s the difference?

The basic home loan does not offer an offset account and usually has restrictions on what you can do with your loan. If you want an offset account (not sure who wouldn’t) then you have to pay the package fee.

Is it worth it?

Here’s why it’s worth it

Offset account

If you get paid a regular salary or have savings parked in an account, then an offset may save you more interest per year than the package fee.

Life of loan discount

We will negotiate a ‘life of the loan’ discount with the bank at the start of the loan, this in its self usually out weighs the annual fee. 0.50% discount will save you $2,500 per year interest on a $500k loan. This will also depend on your loan amount.

Credit card with no annual fee

Banks will offer you a free credit card, which could save you up to $300 per year. If you have a credit card with another bank, then you can close that one and get one with your home loan lender.

Discounts on other bank products

Major banks offer building and contents insurance. Their policies and claim processes are, most times, better than the major insurers. You will receive a discount on the insurance premium if you are on the package. This also applies to other insurances the bank offers.

Talk to us today to see if paying an annual package fee is worth it for you.

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Offset account

If you get paid a regular salary or have savings parked in an account, then an offset may save you more interest per year than the package fee.

Life of loan discount

We will negotiate a ‘life of the loan’ discount with the bank at the start of the loan, this in its self usually out weighs the annual fee. 0.50% discount will save you $2,500 per year interest on a $500k loan. This will also depend on your loan amount.

Credit card with no annual fee

Banks will offer you a free credit card, which could save you up to $300 per year. If you have a credit card with another bank, then you can close that one and get one with your home loan lender.

Discounts on other bank products

Major banks offer building and contents insurance. Their policies and claim processes are, most times, better than the major insurers. You will receive a discount on the insurance premium if you are on the package. This also applies to other insurances the bank offers.

Talk to us today to see if paying an annual package fee is worth it for you.

Share this article

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