The Essential Home Loan Features You Need To Know

When considering a home loan, it’s important to understand the essential features that can significantly impact your borrowing experience and overall financial well-being. Here are some fundamental features of a home loan that you must understand:

Loan Term

The duration within which payments for a loan are to be made is called the loan term, which usually lasts for 15, 20, or 30 years. A longer-term generally results in lower monthly payments but higher overall interest costs.

Loan Amount

This is the total amount you borrow from the lender, typically based on the purchase price of the property or its appraised value. Ensure you borrow an amount that aligns with your financial capacity and property value.

Repayment Options

Home loans usually offer different repayment options. The two main types are principal and interest (P&I) or interest-only (IO). With P&I, you repay the principal amount and interest over the loan term, while IO allows you to pay only the interest for a specified period (usually 5-10 years).

Interest Rate

The interest rate pressures determine the cost of borrowing and affect your month-to-month reimbursements. Therefore, it’s imperative to compare rates from diverse loan specialists and consider whether you are inclined toward a fixed or variable rate. 

Repayment Frequency

You can make monthly, fortnightly, or weekly repayments. Regular payments can help you repay your loan faster and reduce overall interest.

Redraw Facility

A redraw facility allows you to access any extra repayments you’ve made on your loan. In addition, it will enable you to withdraw funds if needed, but some lenders may impose fees or restrictions.

Offset Account

An offset account is a transaction linked to your home loan. The balance in this account is offset against your loan balance, reducing the interest charged on your loan. It can save you significant interest over time.

Extra Repayments

Making extra repayments on your loan can help you pay it off faster and save on interest. Check if your loan allows unlimited extra repayments or if any restrictions or fees are associated with additional payments.


Loan portability allows you to transfer your existing loan to a new property if you decide to sell and purchase a new home. This feature can save you money on loan establishment fees and paperwork.


Be aware of the different expenses related to the domestic loan, including application expenses, progressing expenses, annual expenses, and release expenses. Consider the loan’s general cost, including intrigued rates and fees. 

Remember, it’s fundamental to carefully compare various domestic advance items, review the terms and conditions, and seek advice from a contract broker or money-related advisor to guarantee you select a loan that adjusts your budgetary objectives and circumstances.