The Hidden Calories of Bank West's Lite Home Loan

You should read the fine print on "lite" products in the supermarket, and the same rule applies with "lite" home loans. A loan with an attractive interest rate, for example, may lack the features and flexibility of other loans.

Bank West's Lite Home Loan promises to be simple and flexible.

With their Lite Home Loan, you can borrow up to 95% of the value of your property. You have the flexibility of choosing from weekly, fortnightly or monthly repayments, so you can adapt your repayment plan to suit your income. The application fee can be refunded if you choose to stick with the loan for three years.

These are all useful features of a loan, but before signing up to anything, try to evaluate the loan from all angles. For example, by borrowing 95% of the value of the property, you are likely to need to pay a large amount for lenders mortgage insurance. This adds to the overall cost of your loan, so it's a good idea to look into what's involved. Once you add up the cost to you, the loan may not appear to be so "lite".

Also, once you take into account the huge sums of money you are likely to pay in the long term with your home loan, a $500 application fee refund three years into your loan will seem like a mere drop in the ocean of your finances. Over the term of your loan, $500 may be easily dissolved by various fees and charges along the way. So don't use this refund as your main incentive to sign up.

Bank West offer access to surplus funds in the form of a redraw facility. It's worth reading the fine print though, as a minimum redraw of $1000 applies and depending on how you make the withdrawal, additional fees may apply.

The Lite Home Loan page of Bank West's website offers a 7.15% per annum variable rate with a comparison rate of 7.16% per annum. While this comparison rate is based on a loan of $150,000 for a term of 25 years with the $500 application fee refunded after three years, it fails to take into other borrowing amounts, account redraw fees, early repayment fees and other government and bank fees that may apply.

When exploring your home loan options, it's important to find the right loan to suit your financial situation. Just like when you're in the supermarket, you need to get past the packaging and find the product that matches your needs.

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