Professional Package Home Loans
Professional package home loans exist for people earning a high income, who are then classified as low-risk borrowers to lenders.
Fact checked
Professional package home loans were created in the 1980’s and reserved for doctors, lawyers, CEOs and celebrities alike. Today people working these occupations are of course still able to receive these loans, but they are now open to a much larger portion of the population.
What is a professional package home loan?
Professional package home loans are for those with high incomes that can be considered as low risk borrowers to lenders.
When looking to borrow more than $250,000 for a home loan, you will likely be eligible for a professional package home loan.
Other features of these loans include:
- A higher allowed Loan to Value Ratio (LVR)
- Lower interest rate levels
- Discounts on loan fees
Professional package home loans do not only relate to home loans, they can involve other banking products as well.
How do professional package home loans work?
Aside from all mentioned above, a professional package home loan allows you to bundle all of your banking products together, including:
- Cheque accounts
- Credit Cards
- Insurance
- Any other loans
This means you have a much more simplified banking process. The main feature of this is the waiver of separate annual fees, including credit card fees. Replacing this is one annual fee for all products combined, usually amounting to between $300 and $750.
You will also likely receive a 100% offset account as a part of your professional package home loan. This acts as another bank account with its balance working against the principal on your home loan. For example:
| Amount in 100% offset account | Home loan principal | Interest is charged on |
|---|---|---|
|
$20,000 |
$750,000 |
$730,000 |
An offset account can quickly accelerate and decrease the repayments on your loan, meaning you will likely be mortgage free sooner rather than later.
How can I save more though a professional package home loan?
The potential to save more on your mortgage through a professional package loan comes via special discounts and considerations found within two different categories:
- Interest rates and fees
- Loan to Value Ratio (LVR)
Interest rates and fees
If you are eligible for a professional package home loan, you could receive considerable discounts on interest rates and other home loan related fees.
As mentioned previously, the minimum borrowed amount of a professional package loan is $250,000.
At this base borrowing level, you will see discounts in interest rates such as:
- More than 0.5% for a standard variable rate.
- Close to 0.25% for a fixed rate.
But when you start borrowing over amounts like $750,000 you will see discounts such as:
- Over 1% for a standard variable rate.
- Well over 0.25% for a fixed rate.
Loan to Value Ratio (LVR)
With a professional package home loan, you will be eligible to pay a higher loan to value ratio than someone with a regular home loan.
A higher LVR means that you will pay less for a deposit. Some lenders will allow as high as 95% LVR meaning that you only need to pay 5% of a property’s value as a deposit.
However, this acts as a sliding scale, as a lower LVR/higher deposit will likely entitle you to better offers from lenders.
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How to apply for a professional package home loan
Find the home you want
Usually, the hardest and always the most important step in any home buying process is finding the right home for you. It doesn’t matter whether it’s your first home, you’re upsizing, looking for a family home, a holiday home or even an investment property, it is crucial that you find the perfect home that’s fit for purpose.
Workout if a Professional Package Home Loan is right for you
While all the benefits of a professional package home loan sound great, it is important to understand that they may not be right for everybody.
First of all, you need to work out how many separate banking products you currently use. Most people would have a credit card, but that might be it for some people. Others could potentially have a long list of banking products that they use. This is where a professional package home loan is strongly beneficial as it brings them all under one umbrella.
And last of all if you are reluctant to move any of these products to another lender, a professional package home loan may not be the best option for you.
Work out the terms of your professional package home loan and apply
Now you will need to work out how much you will be placing down as a deposit on your home of choice. This could be any amount depending on the property’s value. You will be able to borrow up to 95% LVR in most cases (as long as you can show you hold the further 5% in genuine savings).
Next you will need to work out how you can bundle all of your banking products to bring under this lender, the lender themselves should be a large help in doing this.
When your application is accepted, be sure to read through its contract very carefully and ensure that you understand all aspects of it. Once you have read through the document, you can then sign it and transition into the settlement phase.
Pros and cons of professional package home loans
PROS
A higher LVR means you will not have pay as much for a deposit as you would with a regular home loan.
Lower interest rates mean that you will end up paying less in the long term than you typically would with a regular home loan.
There are no hidden fees throughout the term of your loan, with many of them being waived.
You will likely receive a 100% offset account, accelerating the repayment process.
All of your financial products will fall under the one lender, making your banking process much easier.
CONS
Annual fee between $300 and $750 for bundling of financial products.
You will likely need to switch lenders for many of your current standing agreements, which could be a tedious process.
