Think­ing of link­ing

A home loan doesn’t have to be just a home loan. It could pay to link your mort­gage with sev­eral other bank­ing prod­ucts, re­ports

The Advertiser - Real Estate - - Brock -

Dion Crowe says link­ing your home loan to your ex­ist­ing bank­ing prod­ucts can have sig­nif­i­cant ben­e­fits. ‘‘One of the eas­i­est and most ef­fec­tive ways to re­duce the amount of in­ter­est you pay on your home loan is to link it with an in­ter­est off­set ac­count,’’ he says.

‘‘This is where you link your loan with an el­i­gi­ble trans­ac­tion ac­count, with any funds in that ac­count off­set­ting the un­paid bal­ance of your loan ac­count upon which in­ter­est is payable. For ex­am­ple, if you have a $250,000 home loan with $5000 in your off­set ac­count, you will only pay in­ter­est on $245,000.’’

Mr Crowe says us­ing your credit card wisely can also help to re­duce in­ter­est if you have an off­set ac­count.

‘‘If you have a credit card, con­sider us­ing it for all your monthly pur­chases and leav­ing the funds in your off­set ac­count un­til your credit card pay­ment is due,’’ he says.

‘‘In do­ing so, you will be us­ing that money to help re­duce the in­ter­est payable on your home loan for the length of time it re­mains in your ac­count.

‘‘Keep in mind that you will need to en­sure your spend­ing doesn’t ex­ceed your in­come and that you pay your credit card in full by the due date if you want to avoid pay­ing in­ter­est on your credit card.’’

BankSA gen­eral man­ager Chris Ward agrees there are sub­stan­tial fi­nan­cial ad­van­tages in pack­ag­ing up fi­nan­cial prod­ucts, in­clud­ing a home loan, credit card and trans­ac­tion ac­count with the one bank.

By bundling up the home loan, credit card and trans­ac­tion ac­count into an all-in-one pack­age, cus­tomers will be able to ob­tain a dis­count on their home loan rate of as much as 0.7 per cent.

The cus­tomer pays one an­nual fee for the pack­age but in re­turn re­ceives fi­nan­cial ben­e­fits, in­clud­ing the dis­count on the home loan rate, no an­nual fees on credit cards and no ac­count keep­ing fees on trans­ac­tion ac­counts.

Mr Ward says banks are es­sen­tially re­ward­ing their cus­tomers for show­ing loy­alty in all ar­eas of bank­ing and fi­nan­cial ser­vices.

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