Evaluating Loan Features in Australia: What to Look for and Why They Matter
Choosing a home loan isn’t just about finding the lowest interest rate—it’s about selecting a loan with the right features that align with your financial goals. Home loans in Australia come with various features that can help reduce interest, improve flexibility, and speed up repayment, but not all loans offer the same benefits.
Understanding how these features work, how they help, and where they fit into the loan process is key to making the most of your mortgage. In this guide, we’ll break down the most important loan features and explain how a mortgage broker can help you navigate these options to find the best fit.
1. Offset Account
What It Is:
An offset account is a transaction account linked to your home loan. The balance in this account offsets your loan principal, reducing the amount of interest you pay.
How It Helps:
✅ Lowers interest costs – If you owe $500,000 and have $50,000 in your offset, you’ll only pay interest on $450,000.
✅ Gives you access to your money – Unlike making extra repayments, funds in an offset account can be withdrawn anytime.
✅ Helps pay off your loan faster – The more money in your offset, the less interest you pay, allowing you to pay off the principal faster.
How It Fits Into the Loan Process:
Offset accounts are ideal for borrowers who want to reduce interest without locking away their savings. A mortgage broker can compare loans with offset options, as some lenders offer multiple offset accounts, while others may charge higher fees for this feature.
2. Redraw Facility
What It Is:
A redraw facility allows you to withdraw extra repayments you’ve made on your loan if needed.
How It Helps:
✅ Saves on interest – Extra repayments reduce the loan balance and the interest charged.
✅ Acts as a financial safety net – You can access surplus payments in case of emergencies.
✅ Encourages disciplined saving – Since redrawing requires a request, it prevents unnecessary spending.
How It Fits Into the Loan Process:
Borrowers who want to make extra repayments but still need access to their money may prefer a loan with a redraw facility. A broker can explain differences between lenders, as some loans have fees, redraw limits, or processing times.
3. Fixed vs. Variable Interest Rates
What They Are:
Fixed Rate: The interest rate stays the same for a set period (usually 1-5 years).
Variable Rate: The interest rate fluctuates based on market conditions.
How They Help:
✅ Fixed Rate: Stability and predictable repayments, making budgeting easier.
✅ Variable Rate: Potential to benefit from rate drops and usually offers more loan features (like offset and redraw).
✅ Split Loan Option: Some borrowers choose a mix of both for flexibility and security.
How It Fits Into the Loan Process:
Choosing between fixed and variable rates depends on your financial goals, risk tolerance, and market conditions. A mortgage broker helps by analyzing interest rate trends and comparing loan structures to suit your situation.
4. Loan Portability
What It Is:
Loan portability allows you to transfer your existing home loan to a new property without refinancing.
How It Helps:
✅ Saves on refinancing costs – Avoids application fees, break costs, and potential higher interest rates.
✅ Convenience – You don’t need to apply for a new loan when moving houses.
✅ Avoids lender switching hassles – No need to renegotiate terms or change lenders.
How It Fits Into the Loan Process:
Loan portability is useful for borrowers who plan to upgrade or move within a few years. However, portability may come with conditions (e.g., similar property value). A broker can assess whether portability is a better option than refinancing.
5. Extra Repayments
What It Is:
Extra repayments allow you to pay more than the minimum required amount, reducing the principal faster.
How It Helps:
✅ Pays off your loan sooner – The more you pay, the less interest you accrue.
✅ Builds equity faster – Extra repayments increase your ownership percentage of the home.
✅ Saves thousands in interest over time – Even small additional payments make a big difference.
How It Fits Into the Loan Process:
Not all loans allow unlimited extra repayments, especially fixed-rate loans (which may have limits or penalties). A mortgage broker can find a loan that offers extra repayment flexibility while keeping costs low.
6. Loan Repayment Frequency (Weekly, Fortnightly, Monthly)
What It Is:
Lenders allow repayments to be made weekly, fortnightly, or monthly.
How It Helps:
✅ Weekly/Fortnightly repayments reduce interest faster – Interest is calculated daily, so more frequent payments lower the overall cost.
✅ Aligns with your income cycle – If you’re paid fortnightly, matching your repayments makes budgeting easier.
How It Fits Into the Loan Process:
Choosing the right repayment frequency can make a difference in how quickly you pay off your mortgage. A mortgage broker helps structure your loan repayments to suit your financial situation.
7. Low Deposit Loan & Lenders Mortgage Insurance (LMI) Waivers
What It Is:
Some loans allow low deposits (5-10%) but may require Lenders Mortgage Insurance (LMI). Certain professions (doctors, accountants, lawyers, etc.) may be eligible for an LMI waiver.
How It Helps:
✅ Allows first-home buyers to enter the market sooner – Instead of saving 20%, you can buy with 5-10%.
✅ LMI waivers reduce costs – Avoiding LMI saves thousands.
✅ Government grants may apply – Some low-deposit loans qualify for government schemes.
How It Fits Into the Loan Process:
For borrowers with low deposits or eligible professions, a broker can identify lenders who waive LMI or offer competitive low-deposit options.
How a Mortgage Broker Helps You Choose the Right Loan Features
With so many loan features available, it’s easy to get overwhelmed. A mortgage broker simplifies the process by:
🔹 Comparing lenders and loan products to find the best features for your needs.
🔹 Explaining fine print on offset accounts, redraw facilities, and extra repayments.
🔹 Structuring your loan to maximize savings and flexibility.
🔹 Avoiding hidden costs like break fees, redraw limits, and high revert rates.
Final Thoughts: What Loan Features Do You Need?
The best loan features depend on your financial situation, long-term goals, and lifestyle. While offset accounts and redraw facilities can help you save on interest, other features like loan portability, extra repayments, and repayment frequency offer flexibility and convenience.
A mortgage broker helps you navigate these choices, ensuring you get a loan that not only meets your needs today but also supports your future financial goals.
Thinking about a home loan and unsure which features to look for? Speak to a broker today and find the right mortgage for your situation.
