Package vs Basic Home Loans: Is the Annual Fee Worth It?

The short answer

A basic loan keeps things simple and cheap, with few or no fees. A package loan charges an annual fee in exchange for extras like a 100% offset account and a rate discount.

Whether the fee pays for itself depends on your loan size, your savings, and how you like to manage your money.

Basic loans

• Low cost: no annual fee, and often no or low upfront fees.
• Fewer features: usually redraw, but no offset account.
• Sharp rates: basic loans can carry very competitive rates, especially at online and non-bank lenders.

A basic loan suits borrowers with smaller loans or little in savings, who want to keep costs to a minimum.

Package loans

Many lenders charge $395 a year for their package. In return, you typically get:

• A 100% offset account: your savings reduce the interest you pay.
• A rate discount: a lower rate than the lender’s standard rate.
• Fee waivers: such as application or settlement fees.
• Extras: sometimes a fee-free credit card, or discounts on insurance and other products.

The exact inclusions vary by lender, so it pays to compare what you’re really getting for the fee.

One fee, many loans

A single package fee usually covers every loan and offset account you hold with that lender under the package. That makes packages good value for split loans, or for investors with several properties.

Example: Ravi has a home loan split into fixed and variable portions, plus two investment loans. One $395 fee covers all four, each with its own offset if he wants one.

Compare the real cost

The package rate discount applies to your whole loan, so the bigger the loan, the more it’s worth. Here’s a simplified first-year comparison, with a basic loan at 6.00% and no fee, against a package at 5.85% plus $395:

Loan size	Basic loan interest	Package interest plus fee	Better value
$250,000	about $15,000	about $15,020	Basic, just
$600,000	about $36,000	about $35,500	Package, by about $500

This doesn’t yet include the offset. At 6.00%, every $6,600 or so of average offset balance saves about $395 a year, enough to cover the fee on its own.

Rates differ between lenders, and sometimes a basic loan beats a package rate even after the discount. Always compare the net cost.

A basic loan with redraw can work out similar

You don’t always need an offset to save interest. If you keep your spare cash in a basic loan’s redraw and keep monitoring your accounts, moving money in and out as needed, the interest saving works out similar to an offset, without the package fee.

The trade-offs are convenience and access. Redraw takes more hands-on management, and if the property might ever become an investment, keeping savings in redraw can affect your tax deductions. See our offset vs redraw lesson for more.

Which suits you?

A package usually suits you if:

• You have a larger loan, where the rate discount adds up.
• You keep meaningful savings you want in an offset.
• You have split loans or multiple properties under one fee.

A basic loan usually suits you if:

• You have a smaller loan, or little in savings.
• You’re happy to manage redraw yourself.
• You want the lowest possible ongoing costs.

Switching later: your needs will change. You can usually move between package and basic as your loan, savings or portfolio grows, so it’s worth reviewing every few years.

Not sure if the fee is worth it?

With access to over 40 lenders, our team of lending specialists can compare package and basic options on your actual loan size and savings, and show you which one costs less.

Book a chat · Next lesson: Comparison rates

All Knowledge Hub lessons

General information only. This article does not consider your objectives, financial situation or needs and is not credit, financial or tax advice. Lender fees, features and rates vary and change regularly. Examples are simplified and rates are hypothetical. Seek advice from a licensed credit adviser and your accountant before acting. Insight Property Finance.