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Is It An Essential Loan For You?
St George Bank
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Have you ever thought about the ways banks dress up their home loan products to lure borrowers into applying? To name just a few, ANZ has the Money Saver, BankWest has the Mortgage Shredder and St George Bank has the Essential Home LoanÂ. When shopping for a home loan, it's important to get past the marketing devices and find out whether it really is essential to your financial situation.
The St George Essential Loan is a variable rate loan that offers a discount on St George's standard variable interest rate.
Eligible home buyers can borrow between $10,000 and $1 million, with a minimum loan term of 2 years and maximum of 30 years. Borrowers applying for either individual or joint loans also need a minimum income of 30% of the total value of the loan.
The discounted rate offered by St George may sound appealing, but even with the discount this rate may still be higher than the rate offered by other non-bank lenders, so remember to shop around before making a commitment.
You should also take more than just the interest rate into consideration when choosing a home loan. Fees and charges, for example, can erode any benefits of a discounted interest rate. The St George Essential Loan attracts a hefty application fee of $600, a settlement fee of $100 and an ongoing account service fee of $12 per month. If you wanted to transfer your Essential Loan to another type of St George Loan, a switching fee of $350 would apply.
The St George Essential Loan offers some basic features such as the ability to make additional repayments and the flexibility to make weekly or fortnightly payments, but lacks some of the features of other loans on the market, such as the ability to split your loan between fixed and variable rates. A redraw facility is available with the Essential Loan, but withdrawals are subject to the bank's approval and a fee of $10 applies to each transaction.
To find out the features and flexibility that would best suit your financial situation, do your research into different home loan types and speak to a financial broker before making a decision.
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