Home Loan Features: What To Choose & What To Avoid

When choosing a home loan, the interest rate isn’t the only factor that matters. Features like offset accounts, redraw facilities, and flexible repayments can make a huge difference to how quickly you pay off your mortgage and how much interest you save. Understanding which features suit your lifestyle and goals can help you avoid unnecessary costs and choose the loan that truly works for you.

In this expert-written guide we will tell you everything you need to know about home loan features, when to use them (and when to skip them).

Some home loans allow you to make extra payments along with your regular monthly ones. These additional repayments lower your loan’s principal amount. This means you will pay less interest during the loan term.

Extra repayments can be a great way to save money on interest over the lifetime of your loan and pay off your home loan faster. For example, paying an extra $200 each month on a $500,000 loan with a 5% interest rate could save you nearly $80,000 over the life of your loan. 

Some loans do not allow you to make extra repayments. This often happens with fixed-rate loans. Some lenders may also limit how much extra you can pay each year. They might also charge fees if you pay off your loan early. However, some loans do let you make unlimited additional repayments. It is important to read the terms carefully.

Read more: Home Loan Extra Repayment Calculator

A redraw facility lets you use any extra money you have paid. This can be helpful if you face an emergency or need to pay for large expenses later.

This feature is very important. It helps you save money on interest. You can still get to your money when you need it. By lowering your loan amount, you can earn more interest than if you just keep your cash in a regular savings account.

An offset account is a kind of transaction account connected to your home loan. The money in this account helps lower the interest you pay on your mortgage. For instance, if your loan is $300,000 and you have $50,000 in your offset account, you will pay interest only on $250,000.

Offset accounts can help you save on interest. You can access your money whenever you need it. Unlike savings accounts that earn taxed interest, offset accounts allow you to save on interest without any tax charges. This is useful, especially if you have to pay a lot in taxes.

Offset accounts are a great feature, and they offer a lot more flexibility compared to a redraw facility. 

If you’re using a redraw, you’ll need to jump through a few extra hoops to access your money. 

With an offset account, the money is there whenever you need it – it’s a normal transaction account. 

The downside of an offset account compared to a redraw facility is the cost. You’ll need to be on a professional package for an offset account, which typically costs $400 per year.

Assuming an interest rate of 4%, you would need to have $10,000 in your offset account to justify the cost of the professional package compared to a basic loan with a redraw facility. 

Read more: What is an Offset Account?

A redraw facility lets you withdraw extra repayments you’ve made on your home loan. It’s different from an offset account because the money stays tied to your loan, not a separate savings account.  In simple terms, it turns your extra repayments into accessible funds without needing a new account.

Every month, you pay a minimum loan repayment. If you pay extra, those funds go into your redraw.

Example:

Redraw funds continue to reduce your interest costs while remaining accessible when needed.

Using a redraw facility can help you save money and stay flexible:

Before using redraw, be aware of some restrictions:

Redraw is ideal for borrowers who:

When choosing the right home loan features, it’s important to understand how each option affects your savings, interest, and access to funds. Different features work better depending on your financial goals and lifestyle. Comparing offset accounts, redraw facilities, and high-interest savings accounts can help you make the best decision. The table below summarises the key points for each feature.

A split rate loan home loan allows you to separate your loan into two parts. One part has a fixed interest rate. This means your payments stay the same. The other part has a variable rate, which offers you more flexibility. With this setup, you get the security of consistent payments. You can also make extra repayments on the variable part.

A split rate might be a good choice if you are concerned about interest rate changes but still want to make extra payments. It provides security and also offers some flexibility.

These loans are often hard to understand. They generally come with added fees and rules. However, they can be helpful if you think interest rates will change a lot. They may also help you reduce your risk.

Interest-only loans let you pay just the interest for a specific time. This means your monthly repayments are lower.

This choice matters a lot. It can give you extra money to spend, mainly for investment properties. Investors can also deduct the interest on their taxes.

In the long term, you will pay more interest. This happens because you are not lowering the main amount of the loan, and you are just paying the interest. This option works well for investors or people who need extra cash for a short time.

Most standard home loans allow you to decide how often you want to make payments. You can pay every week, every two weeks, or once a month. If you pick to pay every two weeks, you might make one extra payment by the end of the year. This can help lower the total interest you need to pay.

Paying your loan every week or every two weeks can save you money in the long run. It is easy and does not require much effort. When you match your payment schedule with your income, it helps you handle your payments better.

Some lenders allow you to stop making repayments. This break gives you a chance to pause your mortgage payments for a little while if you are facing money issues.

This choice is very important. It can help you find space when times are tough. For example, it could support you if you lose your job or need some time off from work.

A line of credit home loan allows you to borrow money up to a certain limit when you need it. It works like a credit card. You will only pay interest on the amount of money you have taken out.

This feature can help you with your renovations or other projects. You might need money bit by bit over time for these tasks.

A line of credit can have higher interest rates and fees. It is suitable for people who handle their money carefully. It is also good for those who get ready for big, unexpected costs.

Loan portability lets you transfer your current home loan to a new house. This option is great if you are moving to a better home. It helps you skip the trouble of applying for a new loan.

This feature is important. It helps you sell your home and buy a new one at the same time. It lets you avoid refinancing.

A professional package costs about $400 each year. With this package, you receive several benefits. You won’t need to pay application fees. You also get lower interest rates and no annual fees for your credit card.

They help with loans that are more than $250,000. They can save you money by reducing fees and interest rates. You can choose from a range of products for extra convenience. 

Choosing the right home loan features depends on your loan type. Variable, fixed, and split loans each work differently. Knowing how features like offset accounts, redraw, and flexible repayments work can help you save money and manage your loan better.

Comparing features across loan types helps you choose the home loan that suits your needs. Think about access to funds, interest savings, and how much flexibility you need.

Not all home loan features are as simple as they seem. Some come with hidden costs or restrictions that can affect your budget and savings.

A low headline interest rate may look attractive but doesn’t include fees, restrictions, or missing features. Always consider:

By understanding these hidden costs and limitations, you can avoid surprises and choose the home loan features that truly benefit your financial situation.

Home loans come with many features, but not every option suits every borrower. Choosing the right home loan features can save money and simplify your mortgage journey.

The best way to find the right features is to speak with an experienced mortgage broker. They will tailor a plan based on your goals. Brokers also help you understand the product disclosure statement and target market determination for different loans.

Some features add real value, while others cost more without much benefit. Choosing wisely ensures your home loan works for you, not against you.

Call us on 1300 088 065 or complete a free assessment to speak with one of our home loan experts.

Emma, a 32-year-old first-home buyer in Brisbane, purchased a home worth $800,000. With disciplined saving, she managed a 20% deposit ($160,000), leaving her with a loan of $640,000 on a 30-year term at an interest rate of 6%.

Although Emma secured a competitive rate, she worried about how long it would take to pay off her mortgage and how much interest she’d end up paying over time. She wanted a way to cut down interest without locking herself into higher monthly repayments she might not always manage.

Emma chose a variable home loan with a 100% offset account. She kept $20,000 in savings consistently in the offset account and added extra funds when she received annual bonuses and tax refunds. Because the offset account directly reduced the balance used to calculate interest, her loan behaved as though it was $620,000 instead of $640,000.

By using her offset account wisely, Emma shaved around 3 years off her loan term and saved approximately $25,000 in interest over the first 10 years of her mortgage. Best of all, she kept full access to her money if she ever needed it, giving her both savings and peace of mind.

Loan features like an offset account only create real value when they align with borrower habits. Emma’s consistent savings made the offset account one of the smartest financial tools in her mortgage journey.

The Australian Government offers several schemes to help first home buyers enter the property market faster. These programs reduce upfront costs and make homeownership more achievable. By using them wisely, you can save thousands and avoid unnecessary fees.

The FHBG helps first home buyers purchase with as little as a 5% deposit.
Recent changes from October 2025 make it even easier to access.

Read more: Housing Australia First Home Guarantee

The FHG supports single parents or legal guardians with at least one dependent.

States offer additional support for first home buyers.

Tip: Eligibility and application steps vary by state. Consult local authorities or a mortgage broker for guidance.

Using these schemes can affect your home loan in several ways:

Speak with a mortgage broker to see which schemes you qualify for. They will provide tailored advice and guide you through each application.

Our team at Hunter Galloway is here to help you buy a home in Australia.  Unlike other mortgage brokers who are just one person operations, we have an entire team of experts dedicated to help make your home loan journey as simple as possible.

If you want to get started, please give us a call on 1300 088 065 or  book a free assessment online to see how we can help.