BOQ In The Smart Start Home Loan Race

Remember the story of the hare and the tortoise? The hare gets off to a racing start, while the tortoise plods along comfortably and ends up winning. When shopping for a home loan, a good start is important, but you need to look at the long term consequences.

Exclusive to existing Bank of Queensland borrowers, the Smart Start Home Loan offers a discounted variable rate for the first 12 months of the loan. After this time, the interest rate will revert to whatever the standard variable rate is at that time.

The Smart Start loan can lend Bank of Queensland borrowers up to 95% of the value of their property for owner-occupied situations, or up to 90% of the value for investment properties. If you do borrow more than 80% of the value of your property, you will also need to cover the cost of Lender's Mortgage Insurance, which protects the bank if you happen to default on any home loan repayments.

A Smart Start Home Loan could benefit home buyers who may need to meet other expenses such as furnishings and home improvements in the first year of the loan, and so would like to avoid making large monthly repayments during this time. Generally, these types of loans generally lack the features and flexibility of other loan types.

Home loans with introductory or honeymoon rates can also carry hefty exit penalties and place strict limitations on the features of the loan. For example, BOQ claim that Smart Start borrowers can make unlimited additional repayments any time and pay off your loan sooner but it is not until you read the fine print that you see the Prepayment Adjustment Administration Fee of $495 that applies to almost all of the Bank of Queensland's home loan that are paid off within three years of settlement.

There is no minimum term of a Smart Start loan, although if you do decide to switch to another BOQ home loan product, a conversion fee of $250 will apply. An ongoing account maintenance fee of $8 per month applies. As the Bank of Queensland Smart Start loan is available only to existing customers, they offer to sweeten the deal by waiving the monthly account maintenance fees of your nominated Ultimate Account.

Always familiarise yourself with the features and fine print of any loan before signing up for a product that could mean stress further down the track. Your home loan is a long term commitment, so look beyond the interest rate and consider how the bigger picture of any loan is suited to your financial situation.