Which mortgage features do I actually need?

Borrower requirements are diverse, so a feature that provides flexibility and choice for one mortgage holder may be an unnecessary cost to another.

Mortgage features: top 8 loan features to consider.

When taking out a mortgage - potentially one of the biggest financial decisions you will ever make - lenders offer many home loan features.

From offset accounts to repayment holidays, there are plenty of options available. But what do they all mean? And which should you choose?

Deciding can be dizzying. But rather than knowing it all, most borrowers can benefit from mortgage savings and convenience with just a few added features.

Borrower requirements are diverse, so a feature that provides flexibility and choice for one mortgage holder may be an unnecessary cost to another.

It's important to remember mortgage options need to align with your goals as a borrower. So taking on all available mortgage features may not maximize returns.

Looking for the best loan feature? Talk to a UNO broker today

Here's everything you need to know about mortgage features. In summary, they include the following:

Loan features at a glance

FeatureDefinitionLow feesLow or no upfront application and ongoing mortgage feesSplit interest rateSplitting your home loan into fixed and variable ratesFlexible repaymentsLets you choose repayment frequency and methodAdditional repaymentsLets you make extra/volountary payments to pay off your loan soonerRedraw facilityAccess to extra repayments you’ve madeOffset accountA bank account linked to your home loan. The balance offsetsRepayment holidayLets you take a holiday from repayments by pausing payments dueLoan portabilityLets you keep the same loan when buying or selling property

Top 8 mortgage/loan features include:

1. Low fees

One of the leading features of any home loan is low upfront and ongoing mortgage fees.
When you apply for a mortgage product, lenders charge various fees that can add up quickly. A low-fee mortgage feature reduces upfront fees or removes them entirely, potentially saving you thousands.
Vincent said this feature ranks among the best.
“Many people base their mortgage decision on the interest rate being charged, but they should also ask about all fees,” he said.

2. Split interest rate

Can't decide between the benefits of a variable rate or the certainty of a fixed rate?
A split interest rate gives you the best of both worlds by combining the two. It divides your mortgage into a variable and split rate.

Split interest rates make budgeting easier by giving you some stability with your repayments and the ability to make voluntary repayments on the variable portion of the loan.
However, the fixed portion of the loan will likely have a limit on repayments and change if interest rates change.

3. Flexible repayments

Flexible repayments enable borrowers to choose how often they repay (i.e., weekly, fortnightly or monthly), giving you greater control of your financial planning.
Flexible repayments can be a good feature if you want to match your mortgage to your needs. For example, if you get paid monthly you might change your repayment frequency to reflect this.

Flexible repayment loans also give you more options for repaying your mortgage, including internet and phone banking or via ATM.

Hot tip: If possible, choose weekly or fortnightly repayments instead of monthly. This will increase your repayment frequency, potentially saving you thousands.

4. Additional repayments

Being able to put extra money towards your home loan on top of your regular payments can help you save on interest and ultimately pay off your loan sooner.

Some loans can limit voluntary/additional repayments. So if you want to pay down your mortgage sooner, an additional repayment mortgage feature may be right for you.

Vincent said borrowers can usually make extra payments on a variable rate but a fixed rate is more restrictive.

“Some lenders don’t offer it on a fixed rate or cap additional repayments on the fixed rate,” he says.

5. Redraw facility

A redraw facility is a mortgage feature that enables you to access (or redraw) additional repayments made on your loan.

So, if you have made extra repayments and are ahead on your loan, you can 'redraw' these at a later date.

Redraw facilities can be particularly handy over the course of a 25- or 30-year loan, especially if renovations, children or school fees are on the cards.

6. Offset account

Offset accounts are loan facilities that link a savings or transaction account to your home loan.
The balance of this account is 'offset' against the amount you owe on your loan, potentially saving thousands if your offset balance is high enough.

Offset accounts can help reduce the interest you pay on a mortgage and are particularly handy during rainy days when money is tight but you've managed to save in the past.

7. Repayment holiday

Repayment holidays enable you take a break (holiday) from loan repayments when you need to you may need to direct your cash elsewhere.

Whether Christmas, a holiday, or challenging times, repayment holidays can give you welcome relief from mortgage repayments.

Lenders may provide a repayment holiday of between three to 12 months if you’ve made enough additional repayments.

It is important to note interest still accrues during a repayment holiday.

Home Loan portability

Home loan portability lets you keep your home loan when selling or changing homes.

When you take out a loan, the bank uses your home as security against the loan. Loan portability enables you to swap security when buying a new home.

Many Australians are unlikely to stay in the same home for 25 years. They can hence be a great feature for growing families or people who want to downsize.

Which mortgage features to choose?

UNO Founder Vincent Turner says there are a few key loan options that may fast-track home ownership and streamline the mortgage process.

Read: Choosing the right home loan

“It’s important to get the right home loan features from the start so you aren’t paying for extras you don’t need. If you have too many features, watch out for what are considered ‘silly fees’,” Turner says.

The difference between a good and an outstanding home loan can include options such a split interest rate, no or low fees, a redraw facility, an offset account, flexible repayments and a repayment holiday.

“Lenders vary in term of what they offer and there is often a trade-off between having many features on your mortgage and paying a higher interest rate. So be selective, ask a lot of questions and choose a few key features that suit your strategy.”

Your Empire chief executive Chris Gray adds that borrowers shouldn’t assume a lender they already have a loan or bank account with will offer them the most competitive mortgage features.

“It might be convenient to stay with the same lender as you won’t have to resupply all the paperwork,” he says. “But your bank will probably work harder to get a new customer than they will to look after an existing one like you with the most competitive deal.

“Be mortgage savvy and consider a loan and its features beyond a lender you’re already with.”

Turner says UNO's online technology is able to compare the home loan features of 22 lenders in the Australian market within seconds.

“Your home loan is usually over a 30-year contract, so customers want key features that give them greater control over their finances with flexibility, convenience and the ability to shave years off their mortgage.”

Looking for the best deal on a home loan? A UNO broker can help compare deals from over 20 lenders.

Book Call Now

Book Call Now

UNO home loans

Need help with your home loan?

UNO Brokers are available night and day for a quick review or your situation and bring expertise that will support better decision making that will save you time and money. Book in a quick call when it suits your busy schedule

Get Started

Related Articles

TESTIMONIALS

What our customers are saying

Rosie Deiath
July 2, 2024
Karis from UNO was so supportive throughout the entire process of buying our first home. She was contactable at any time, and answered all our silly questions for us. We couldn't recommend Karis and her team enough, as it always felt like she was in our corner with our best interests at heart.
Read more
Jack Mikkelsen
July 2, 2024
We dealt with Karis Churchill as the mortgage broker for our first home. Karis was so supportive and knowledgeable through the whole process! A+ mortgage broker. Definitely utilise her expertise if you’re buying a house!
Read more
Kapil Baldota
June 25, 2024
Eren Tan is absolutely one of the best mortgage brokers in Melbourne! Keeping us well informed throughout the process. Eren gave us a helpful hand in managing to get our loan over the line in a quick and efficient way which is what we wanted and he delivered on that. Thank you Eren Tan!
Read more
A M
June 21, 2024
I only have praise from my Uno experience! I was a broker sceptic, having done all of the hard work myself for my first two property purchases and sale. I'm now a proud broker advocate having used UNO (Karis Churchill) for two refinances and purchase. The value add Karis brought cannot be underrated! Not only has Karis got me the best rate, with a bonus cash back (nearly unheard of in this climate), she has done it with the least back-a-forth and with the least administrative burden on me (the thing that can deters people from refinancing to begin with). Karis is always on top of everything. Karis knows her stuff. She is the most responsive of any professional service provider I've ever used (my banker never text with an update at 7pm on a Sunday) without being overbearing. You know she's got your back and in my experience the value speaks for itself. Thank you to the whole UNO team, thank you especially to Karis.
Read more
Leanda Cawdry
June 8, 2024
Very pleased with the outcome of this process, Michael Parsons and his team at UNO were helpful, communicative, and took all the stress out of the process of finding me a refinance deal that met my needs. Would definitely recommend Michael and UNO, and I already have!
Read more
Glen Matthews
May 29, 2024
Regarding UNO Home Loan services. I had great experience with uno home loans, Michael parsons was my broker for UNO Home Loans we had excellent communication throughout the whole home loan application. If I had any questions on home loan application which were many were answered in great detail. He had the time to assist me in filling out endless application forms at anytime through the day or night which made the application process stress free. So I would strongly recommend Michael parsons from UNO Home Loans to try his services you will not be disappointed. Thanks to Michael parsons I have the lowest home loan interest rate I could ever hope for which I particularly ask for. It’s was a pleasure working with him. And will be using his services in the near future.
Read more
Gillian Anderson
May 28, 2024
Thank you to Michael and UNO for their help in securing our home loan. I like the way they break everything down in simple terms to ensure that you can make the right decision. Michael was polite and very patient to help us get things across the line. We are now sitting in our first home away from rental circus. Can't recommend them enough. Thanks Michael and thanks UNO
Read more
Andy Song
May 17, 2024
Amy has been absolutely wonderful as a broker. I would not hesitate one bit in recommending her services.
Read more
Troy H
May 13, 2024
Scott Wilkinson did a great job as my broker. He was very patient and always happy to answer my numerous questions throughout the considerable period of time that it took to secure a suitable property. Would certainly recommend Scott and the team at UNO for anyone seeking a broker.
Read more
Elvin Singh
May 10, 2024
First time I have used a Broker and I must say Andrew Wyers and his team were amazing to work with and handled my refinance from a Big4 bank. He was able to understand my needs and find a lender that will be able to help me grow my investment portfolio. Andrew and his team kept me updated as part of my refinance journey and made the process super easy and I was able to refi to new lender in under 2 weeks. Would highly recommend Andrew.
Read more
Nadine Steffens
April 19, 2024
Scott and the team at Uno are absolutely 💯 amazing. I don't think I could have done my loan on my own. They are highly motivated and I do recommend them.
Read more
Andrew
April 16, 2024
Dealing with Scott Wilkinson was an absolute delight. Scott is tenacious, hard working and readily available. He made a very stressful process for me and my partner smooth sailing. Would highly recommend.
Read more