Figuring out which features matter most in a home loan can feel confusing, especially with all the options floating around. Living in Australia, I’ve seen the choices stretch way beyond just picking a low interest rate. There are plenty of home loan features out there, each with its own perks—some that save you money, others that add more flexibility. I’m going to walk through the big-ticket home loan features you’ll likely come across, breaking them down so you can spot which ones are worth considering for your needs.
Understanding Common Home Loan Features
Australia’s home loan market has grown quickly, with lenders adding heaps of features to attract buyers and refinancers. Each of these features works differently, and the value they offer depends on how you want to manage your loan. Whether your focus is saving on interest, paying out your loan faster, or juggling irregular income, there is probably a home loan feature built for you.
Knowing what’s available helps you cut through marketing hype and find options that genuinely work for your situation. I’ll go over all the big ones below, and if you want to get into the details, keep an eye out for small print, as some features work better in combination with others. It’s always good to pause and look at how each could fit into your day-to-day banking and lifestyle needs, too.
Key Home Loan Features Available in Australia
- Offset Account
- Redraw Facility
- Fixed vs Variable Rate
- Interest-Only Repayments
- Split Loans
- Loan Portability
- Extra Repayments / Early Repayment
- Repayment Holiday and Flexible Repayment Options
- Construction Loan Features
- Package Home Loans
- Family Guarantee or Parent Assist
- Professional Packages
Some home loans come with all of these, others just a few. Understanding what each does makes it much easier to spot what you’ll actually use and what might just add extra costs. As lenders roll out new combinations and digital features, it’s smart to stay curious and ask questions about new products, too.
Offset Account: How It Works and Why People Love It
An offset account is a regular transaction account linked to your home loan. Any money sitting in the offset reduces the interest you’re charged, since you only pay interest on the balance of your home loan minus whatever’s in your offset.
For example, if you owe $500,000 on your loan but have $20,000 sitting in your offset account, you get charged interest as though your loan is $480,000. The beauty here is that you can access your offset funds like a regular account, but every dollar saves you some interest. Offset accounts are really popular among Aussies trying to pay down their loans faster or just keep some cash flow flexibility. Another bonus is that offset accounts aren’t just for big savers—even smaller, regular deposits can add up to meaningful interest savings over time.
Redraw Facility: What Is It and When Does It Help?
A redraw facility lets you take back any extra repayments you’ve made above your minimum repayment. It’s basically a backup if you’ve been ahead on your repayments and suddenly need some funds for home renos, a car, or even just to handle unexpected expenses. Not all loans with redraw let you pull money out quickly—sometimes, there are limits or fees for using it, so double check the details from your lender. For many, having redraw handy adds peace of mind for life’s surprises while still helping knock down your interest if you’re paying extra. Over the years, redraw facilities have become easier to use via banking apps, making them an accessible feature for many.
Fixed, Variable, and Split Rate Options
This choice affects how much your loan repayments go up or down over time. Here’s how it plays out:
- Fixed Rate: Locks in your interest rate for a set period. Your repayments don’t change, so you can budget with confidence. The downside is usually fewer flexible features, and if rates drop in the market, you might miss out on savings.
- Variable Rate: The rate can switch up at any time the lender decides (often after movements from the Reserve Bank). Repayments may change, but you often get access to more flexible features, such as unlimited extra repayments or a redraw facility.
- Split Loan: Splitting your loan means one part is fixed and another is variable. You get a bit of both—some repayment certainty, some flexibility. You can usually choose the split ratio that fits your risk comfort and payment goals.
If you’re uncertain about future rate changes, split loans can help you balance risk and flexibility. Sometimes, borrowers start with a fixed component to lock in certainty, then switch up as their needs change. Make sure you get clear on any break fees or reversion rates after the fixed period ends.
Making the Most of Interest-Only Repayments
Interest-only home loans let you pay just the interest (not the principal part of the loan) for a set period. Monthly repayments are much lower during this stage. Investors sometimes use interest-only loans to keep cash flow higher. Owner-occupiers may use them while managing other big expenses, like during home construction. But once the interest-only period ends, your monthly repayments jump, since you’ve got less time left to pay off the balance. It’s important to plan ahead for those higher payments and make sure they’ll still fit your budget later.
Extra Features: Early Repayment, Redraw, and More Flexibility
Making extra repayments means tossing more money onto your home loan whenever you’ve got a little extra. Even small, regular extra payments can carve years off your loan term and save heaps in interest. Not every fixed home loan lets you make unlimited extra repayments—there are often caps for fixed loans, but variable rate loans are usually more flexible. Some banks also let you coordinate with an offset account or redraw facility if you think you might want that money back later. Keep in mind, early exit fees are rare nowadays, but there might still be charges for large lump sum repayments in some cases, so always check up-front.
Repayment Holidays or Flexible Repayment Options
Some home loans offer extended flexibility if your life (or income) gets a bit bumpy. Repayment holidays let you temporarily stop repaying your loan, usually after you’ve made extra repayments ahead of time or under special circumstances like parental leave or illness. There might also be the option to make smaller repayments for a time, adjust your payment dates, or change from monthly to fortnightly payments. Every lender sets their own rules, so get the specifics before counting on this. For families or self-employed folks, this feature can take some pressure off during life’s unpredictable moments.
Construction Loans and Interest-Only During Construction
If you’re building a house, most lenders use a construction loan setup. While the house is being built, you draw down (access) the loan in stages, usually matching the builder’s progress. For that building period, you’re commonly only paying interest on what you’ve drawn down so far, not the full loan amount. This helps keep repayments smaller early on and works well for big building projects, renovations, or knockdown rebuilds. Once construction ends, your loan usually switches over to a principal and interest structure. Some banks now offer digital progress draw features to smooth the way for both you and your builder.
Loan Portability: Keeping Your Loan When You Move
If you’re moving houses but don’t want to reapply for a new loan (and pay fresh application fees), some loans let you “port” your deal to your new property. That means keeping your old account and features, but swapping out the property that secures your home loan. Loan portability is worth checking if you’re eyeing upsizing or downsizing in the next few years. It can save you time, money, and paperwork—though some conditions and changeover fees may apply, so ask your lender exactly how the process unfolds.
Professional Packages and Loan Bundles
Lenders in Australia often bundle loans with other banking products and call it a “professional package” or “package loan.” You might get discounts on interest rates, account fee waivers, a linked credit card, or other services just for having the home loan. These packages sometimes save regular borrowers hundreds per year in fees or interest, but they often come with an annual package fee. Check if you’ll actually use the extras before paying for them. If you’re a salaried professional (like a doctor, lawyer, or engineer), you may access even better discounts through special ‘professional’ packages—well worth asking about if your job fits the bill.
Family Guarantee and Parent Assist Features
If you’re finding it tough to save a full 20% deposit, family guarantee loans let a family member (most commonly parents) use some of their own equity as extra security. This setup can help avoid lenders mortgage insurance (LMI) and make buying your first home less stressful. There are risks for the guarantor, so this feature is only worth considering with honest conversations and possibly some legal advice. Increasingly, banks offer detailed guides and resources to make the process clearer before you sign up.
Choosing the Best Mix of Features for You
Everyone’s ideal home loan looks a bit different. I always suggest starting with a list of your must-haves—do you need redraw? Do you want the safety of fixed repayments? Or would an offset account help you get ahead?
You don’t always get every feature on every product, so knowing which features you’ll use most (and which add costs without real benefit) is super important. Comparison sites like Finder and Canstar make it easy to check what features are attached to each loan offer. These have been really handy for me and others I know, especially during refinancing stages. Don’t forget to look for independent reviews and user stories to get a sense of how the features play out in real life; sometimes, a slick feature on paper can end up being a headache if service is slow or app access isn’t smooth.
Frequently Asked Questions
What’s the difference between an offset account and a redraw facility?
Both help reduce the interest you pay on a home loan. The key difference is that an offset is a separate bank account that you can use like any other, while redraw only lets you access extra repayments you’ve made, and access can be slower or limited. Some people prefer offset for its true day-to-day access, while others find redraw enough for emergencies or large one-offs.
Can I make extra payments on a fixed rate loan?
Usually, yes, but many lenders set a cap on how much extra you can pay off during your fixed term before triggering extra fees. Always check your lender’s rules before paying in big lump sums. With variable loans, you typically have more freedom for extra payments without penalty.
Are package loans worth it?
Package loans can save you on fees and interest if you’ll use the extras (like a credit card or extra savings account). If not, the annual fee could outweigh any benefits, so weigh it up before signing on. It also pays to double-check whether you can opt out of components you don’t use to avoid unnecessary costs.
What should I check before choosing a construction loan?
Look for staged payments, low fees for progress draws, and interest-only repayment options during the build. Ask your lender exactly what documents you’ll need for each phase and whether you can lock in rates for part or all of the construction period. Some lenders may offer site visits or dedicated support officers for construction clients, which can be a big plus during complex projects.
Final Thoughts: Making Home Loan Features Work for You
Matching your loan features to your real-life needs can save thousands over the life of your loan, and let you sleep easier at night. There’s no prize for grabbing the fanciest-sounding product if you’ll never use half the perks, but missing out on a handy feature (like redraw or offset) can make your loan feel more stressful or expensive.
Always start with your goals—flexibility, savings, cash flow, or just keeping things simple. That makes filtering through all the home loan features in Australia a whole lot more manageable. If you’re not sure where to start, talk to a broker or reach out to your current lender and ask them to break down the differences in plain language. With a bit of research and a clear set of priorities, you’ll end up with a home loan setup that actually works for you, not the bank.
About The Author: Hesti Bell is the founder of Gold Gate Finance and holds a Diploma of Finance and Mortgage Broking Management. Driven by the belief that everyone deserves the opportunity to own their own home, Hesti is passionate about helping people achieve their goals and expand their financial possibilities.