Many loans can be tailored to meet your needs. However, most special features come with a cost, so carefully consider exactly what you need and how it will benefit you.
A mortgage offset facility can save interest on your loan. Your mortgage is linked to a savings account where you can deposit cash. Your interest payment is calculated on the remaining loan amount less whatever amount sits in the offset account, thus saving you money on interest.
However, keep in mind that mortgage offset loans usually charge a higher rate of interest and may impose fees and charges for the offset facility.
A redraw facility allows you to withdraw any extra repayments you have made. Competitively-priced loans with redraw facilities are increasingly common, but you may still end up paying more.
- often charge a fee for each withdrawal
- may set a minimum amount for each redraw
- may limit the number of redraws per year.
Think about how often you are likely to use a redraw facility before deciding whether you need this feature.
Mortgage protection insurance
If you are heavily mortgaged, your lender may insist that you take out mortgage protection insurance. Even though you are paying for this insurance, it does not act to protect you. Mortgage protection insurance protects the lender from any shortfall in your repayments or if you default. If the insurance company makes a repayment to the lender, the insurance company will pursue you for that repayment.
Last reviewed 22/11/2011