Home loan package for borrowers: Do you need one?

In today’s competitive mortgage market, Australian borrowers have seemingly endless home loan options.

In my experience as a broker I see borrowers often overwhelmed with their lending choices.

Beyond the standard variable or fixed rate loans, one of the most common offerings from banks and lenders is the home loan package.

But what exactly is a home loan package? Why do so many borrowers sign up for them? And is the home loan package all that it is cracked up to be? I unpack what you need to know.

What is a home loan package?

A home loan package – often called a professional package or package loan – is where a lender bundles a home loan together with other financial products, typically for an annual fee.

When you sign up for a home loan package, it usually includes:

• Multiple home loans
• A credit card with a fee waiver
• A transaction account
• Optional offset accounts
• Potential discounts on insurance products, personal loans, or financial planning services

The typical cost? An annual fee, usually around $300–$400 per year.

Why do lenders offer home loan packages?

From a lender’s point of view, a package is a way to offer customers more than a home loan. It can prove to be a compelling offer when multiple products and benefits are rolled into a home loan package. For borrowers, it can feel like a convenient one-stop shop — and often, it really can be.

Lenders see it as a nice way to win customers loyalty by offering them a suite of products in addition to the home loan. By offering fee waivers and rate discounts, they encourage customers to take multiple products, making it less likely they’ll refinance elsewhere.

Key benefits for borrowers

1. Interest rate discounts

The biggest drawcard of a home loan package is the discount on the standard variable (or fixed) rate.

Depending on the size of your loan and the lender, these discounts can be significant — often around 0.5%–2.5% off the advertised rate.

When a lender is considering you for an interest rate discount– they will usually look at the total lending you hold under your package – not just one home loan in isolation. This is a key benefit of having your home loans at one lender under a home loan package.

Over the life of a typical 25–30 year mortgage, even small interest rate discount can translate into thousands of dollars saved.

2. Offset accounts

Home loan packages almost always include an offset account – or allow you to add multiple offsets.

An offset account is a transaction account linked to your home loan. Any money sitting in it “offsets” your loan balance, so you pay less interest.

For example, if you owe $500,000 and have $30,000 in your offset, you only pay interest on $470,000.

3. Multiple home loan splits

If you want a home loan split – say a part variable and part fixed home loan – a home loan package usually caters for these without any additional fees.

This can also be handy if you have an investment property or two. A home loan package should allow both investment loans and owner-occupied loans for the one annual fee.

4. Fee savings

A home loan package usually comes with fee waivers like:

• Home loan application fee waiver (around $600)
• Home loan maintenance fees (around $8-15 per month)
• An annual credit card fee (which can be $100–$400)
• Ongoing monthly service fees on transaction accounts

These fee savings add up, especially if you use these products anyway.

5. Extra features

Some home loan packages can include:

• Free variations to your home loans – like changing from a variable to a fixed home loan.
• Discounts on home and contents insurance
• Cheaper rates on personal loans or car loans
• Access to dedicated banking support

While these might not matter to everyone, they can add value if you’d otherwise pay for them.

Things to watch out for

While package loans can be very attractive, they’re not always the best choice for everyone.

1. The annual fee

The $300–$400 fee sounds modest, but over 30 years that’s $9,000–$12,000. The rate discount and fee waivers need to outweigh this cost – unless other home loan package features are super-compelling.

If your loan is small (say, under $150,000–$200,000), the savings may not justify the fee. Borrowers with smaller loan balances would typically consider a more basic home loan for a low variable interest rate without all the features—and less fees.

2. Complexity

A home loan package bundles products together. Your circumstances can change. Say you sell an investment property to reduce your debt and also want to close your credit card. If you remain on a home loan package you might end up paying for features you never use.

Home loan package alternatives

I am seeing less home loan package options and more alternatives being released to the borrowers. The newer home loan offerings seem put the borrower in the drivers seat more than the original home loan package.

Home loan packages vs Basic loans

To see whether a package makes sense, compare it to a basic home loan.

Basic loans usually:

• Have minimal or no annual fee
• Offer fewer features (offset options limited)
• Sometimes have lower interest rates than a packaged rate

A borrower who won’t use the offset account, doesn’t need a credit card, or has a small loan may be better off with a basic home loan and less fees.

Pay for what you use

Many new home loans start off as a basic loan with the borrower paying for what they use – compared to a home loan package that charges whether products are used. You might add an offset for $10 per month and still be able to negotiate a low rate.

That can result in an annual fee of $120 compared to a home loan package of $300-$400.

Is a home loan package worth it?

In my experience, the interest rate discount is the biggest reason borrowers are drawn to a home loan package. But you should consider the following as well.

Calculate real savings
Look at the total cost: Interest plus fees less discounts.

A licensed mortgage broker can help here.

Consider your loan size and balance
Larger loans typically benefit more from the rate discount. Smaller loans might not save enough to justify the annual fee.

Think about your banking habits
Of all the features a home loan package offers – which ones will you actually use?

Check the fine print
Make sure you understand:

• When the discount applies (sometimes it’s only for the first few years)
• Whether the discount applies to fixed, variable or split loans
• What happens if you switch products later

Final word

Home loan packages remain a popular choice in Australia — and for good reason. They offer real savings, especially for larger loan amounts. A home loan package can provide flexibility, and convenience, especially if you use the included features.

But they’re not automatically the best choice. The key is to:

• Do the maths
• Understand your own needs. Is an offset if the right product for you?
• Use a mortgage broker – don’t assume the big banks always have the best deal

Whether you choose a package loan or a basic loan, being an informed borrower will help you make the right decision for your financial future.