 |
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| Frequently
Asked Questions |
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Click here
for
brochure request
and application
details. |
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Home Loans |
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Explain
the BankSmart table headers
What
other costs are payable when purchasing a home?
What
is a split (combination) loan? What are the benefits?
What
is a redraw facility? What are the benefits?
Is
refinancing more trouble that it is worth?
What
is a portable loan?
What
is an offset account?
What
are All in One loans? What are the benefits?
Reading
the BankSmart Home
Loan Tables
| Table
Header |
Definition |
| Institution |
name of lender
and product |
| Initial
Rate |
Initial interest
rate |
| Variable
Default |
The
rate the loan defaults/rolls to after the initial
period if no action is taken - generally applies to
fixed/capped rates after the fixed
period expires. For variable loans where there is no
initial period, the variable/default
rate is listed as a dash. Note: variable interest rates
can change any time during the
loan. |
| Comparison
Rate |
Calculated using the uniform Consumer Credit Code
method. This includes all
ongoing fees and upfront fees (establishment, valuation
and legals based on $100,000 loan
over 25 years using the first seven years of
calculations). |
| Total
Entry Fee |
The total of fees which must be paid to the
lender to establish the loan. EG. Application,
Establishment, Valuation and Legal. |
| Ongoing
fee |
Any
ongoing fees charged by the lender. EG. Monthly fees |
Discharge |
Fees payable (legal and administrative) at
the end of a mortgage. |
Break Cost |
A
break cost is a fee charged for
exiting a loan before the end of the agreed term. |
Additional
repayments
(max; cost) |
The maximum value of additional repayments
which can be made without incurring an interest
adjustment/break cost calculation. |
Redraw Facility
(no. free; cost; $min;$max; limit) |
How many redraws you can make free, cost per
redraw, the minimum amount you can redraw, the maximum
amount you can redraw and the limit
to the number of redraws you can make. |
Offset Account |
y
- yes or n/a - not available |
Salary Facility/All in one |
y
- yes or n/a - not available |
Split Loan/Combination Loan (fee) |
$
fee amount or n/a - not available
|
Portable Loan (fee) |
$
fee amount or n/a - not available |
|
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|
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What other
costs do I need to be aware of when purchasing a
home? |
 |
Establishment
fees
on your loan can cost up to $750. Mortgage
insurance, generally payable
if you are borrowing more than 80% of the value of your
home, can be as high as 1.4% of
the loan amount.
Conveyancing and legal charges, often
in the vicinity of $1000, are
further charges you can expect to pay.
Stamp duty is payable on both your
property purchase and your mortgage
(although there are exemptions) and you will likely be
charged transfer fees
also.
On top of these unavoidable upfront costs are a number
of optional (but often necessary)
charges such as pest inspections and home and contents
insurance. |
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What is a
combination (formerly known as split) loan? What are the
benefits? |
|
Many
lenders allow you to combine
two or more different loans, such as a variable product,
fixed product and perhaps an
equity product, under the one banner. The advantage is
that you are able to hedge your
bets against rate movements - if rates move up, your
fixed portion remains unaffected, if
rates move down your variable portion will decrease in
rate. You are also able to utilise
the various features associated with the different
loans. For example, a variable product
may provide you with a redraw facility and the ability
to make unlimited additional
repayments, whereas a fixed product may not. Some
lenders will charge you no more to
establish a combination loan as opposed to a regular
loan, however others may charge you a
fee. |
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What
is a redraw facility? What are the benefits? |
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A redraw facility allows
you to access funds paid into your loan account over and
above your minimum repayments.
Borrowers often repay more than required to reduce their
loan balance and reduce interest
payments. Redraw allows you to do this in the knowledge
that you will be able to re-access
these funds if you need to. Most variable loans have a
redraw facility, and some lenders
offer it on fixed loans, however this is far less
common. Be warned! Many institutions
will
- limit the number
of redraws you can make each year
- set a minimum redraw amount
(often around $2,000)
- charge you up to $50 per redraw
Such limitations make it unfeasible to use the facility for
anything
other than large, one-off purchases. |
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Is
refinancing more trouble that it is worth? |
|
As
interest rates drop, people
are encouraged to pay out their existing higher rate
loans and shift to a lower rate. If
you are locked into a fixed rate loan, early termination
will almost always incur
¡®break costs¡¯ which can run into thousands of dollars.
Any break costs must be
taken into account when considering the benefit of
moving to a lower rate. Paying out a
variable loan may incur a small administration charge,
making refinancing more feasible.
However, remember that if you refinance with a new
lender or even with the same lender but
a different loan, you may have to pay establishment fees
again. In times of significant
rate decreases, refinancing is definitely a viable
option, but see your accountant or
financial adviser to determine just how much you will
save so you can determine the
benefit. |
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What is a
portable loan? |
|
A
portable loan is one that is
able to be transferred to a new property ie have the
security substituted. Some lenders
may charge as much as $600 for this service, and on top
of this you may have to pay any
valuation or legal charges yourself. Most lenders
claiming to have portable loans will
specify that you must settle on the same day and the
mortgage over the new property must
not exceed the original loan amount. Some lenders will
allow you to increase the amount
but will often charge you a fee for renegotiation.
Lenders often claim their loans are
portable, when in actual fact they are merely
discharging the original loan, drawing up a
new one and charging you another establishment fee plus
charges for winding up the
original loan. |
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What is an
offset account? |
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An
offset account is a savings
account run in conjunction with your home loan account.
Funds in the offset account earn
interest which is then ¡®offset¡¯ against the interest you
are paying on your
loan. With a 100% offset account, you earn the same rate
of interest as the rate you are
paying on your home loan. The offset account has a
similar effect to a redraw account in
that the more funds you have in the account and the
longer you can leave them in there,
the more you will be reducing the interest accruing.
Offset accounts generally operate
like day to day transaction accounts. Access may be
through a cash card, credit card,
cheque book, phone or over-the-counter. As with most
savings accounts, they will generally
have a specified number of free transactions per month,
and when the free limit is
exceeded, small transaction fees will apply. |
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What are All in
One loans? What are the benefits? |
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All-in-one
loans allow you to pay
all your salary/income directly into your loan account.
These extra funds reduce the
balance thereby reducing the interest payable, which is
generally calculated on a daily
basis. All payments and purchases come directly from the
loan account, which operates like
a day to day transaction account. You can often access
the funds via credit card, eftpos
and cheque. This is similar to the operation of an
offset account, however all-in-one
loans are a single account, not a loan and a separate
savings account. The idea is to
leave the maximum possible additional funds in the loan
for as long as possible to reduce
the balance. Institutions offering all in one loans
often claim to be able to cut years
and dollars off your home loan, however the saving
depends on the borrowers earnings and
ability to leave funds in the account. |
|
Credit Cards
Charge
Cards, Loyalty
Cards, Gold
Cards |
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|
What
is FID?
Show
me the Cards where the
Annual Fee is waived if I spend over a certain amount.
Which
Cards/Accounts which offer 90 day Purchase Protection
Insurance?
Which
Cards offer me extended warranties on electrical
goods I purchase with the card?
What's
the difference between EFTPOS and ATM?
What
do I do if I lose my Card(s)?
If
my Card is lost or stolen will I be liable for any losses?
Do
I have to have an account with the Bank to have one of their Cards?
Who
can I turn to if I need help managing my Card debt?
I
am not eligible for a credit card, is there any card I can use
which offers me similar benefits?
How
are Credit Union cards different to banks?
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What is
FID? |
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Financial
Institutions Duty (FID)
applies to all deposits, including payments to your card
account. |
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| State
or Territory |
FID
charge |
| NSW,ACT,
VIC, WA, NT, TAS |
6c per $100 |
| SA |
6.5c per $100 |
| QLD |
0c |
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Show
me the Cards where the Annual Fee is waived if I spend over a
certain amount. |
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| Card
Name |
First
Year |
No
Fee if annual spend more than |
Card
Type |
| ANZ Telstra Visa |
free |
$2,400 |
Loyalty |
| Westpac
Gold Card |
free |
$12,000 |
Gold |
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Which
Cards/Accounts which offer 90 day
Purchase Protection Insurance? |
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Mostly
Gold Cards offer 90 day
Purchase Protection Insurance.
- Citibank credit cards are the
exception - you are entitled
to the insurance even if you have a normal MasterCard or
Visa.
- As a St. George Bank Day to
Day Account or Select Deluxe
Account holder you are entitled to 90 day purchase
protection insurance on most items
bought via their "Shoppers Hotline". The Shoppers Hotline is
a free shopping
comparison and purchasing service offered by St. George
Bank.
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| Card Name |
Card Type |
| ANZ Gold
MasterCard |
Gold |
| ANZ
Premier Visa Gold |
Gold |
| ANZ
Telstra Visa Gold |
Gold |
| ANZ Qantas
Telstra Visa Gold |
Gold |
| BankWest
Gold Visa |
Gold |
| Bank of
South Australia Gold Visa |
Gold |
| All
Citibank cards |
Credit/Gold |
| National
Australia Bank Gold Cards |
Gold |
| St George
Bank Select and Select Deluxe |
n/a |
| Trust Bank
Gold Visa |
Gold |
| Westpac
Gold Cards |
Gold |
|
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Which
Cards offer me extended warranties on
electrical goods I purchase with the card? |
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The
following card issuers
provide an extended warranty service. The extended warranty
gives you one extra year on
top of the manufacturers warranty. American Express give two
extra years if the electrical
good is Australian made. |
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| Card
with extended warranty |
Card
Type |
| American Express -
"Buyers Advantage" |
Charge/Gold |
| Commonwealth Bank Gold Card |
Gold |
| David Jones |
Store |
| NAB Gold Visa |
Gold |
| Trust Bank Gold Visa Card |
Gold |
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What's
the difference between EFTPOS and ATM? |
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EFTPOS -
Electronic Funds
Transfer at Point of Sale. These are the gadgets you use when
paying for your purchases by
cash from your account for example at the supermarket.
ATM - Automatic Teller Machine. Usually placed outside the
Bank's branch the ATM allows
you to withdraw cash and perform other banking transactions
without going into the branch. |
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What
do I do if I lose my Card(s)? |
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Contact
your Bank's card
department immediately. They will then give you further
instructions.
Consider registering all your Cards with Credit
Card Sentinel
then if your wallet is lost or stolen all it takes in one phone
call and they will cancel
all your cards. You can also register all family members for no
extra charge. |
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If
my Card is lost or stolen will I be liable for any losses? |
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Banks
usually advise their
customers that as long as they did not record their PIN number
with their card and
contacted their bank as soon as they discovered the loss, then
they are not liable for any
losses over $50. Contact your Bank to find out your Bank's
policy or review the conditions
of use booklet sent to you with your card.
If you are unable to successfully resolve a dispute with your
Bank then contact the
Banking Ombudsman on 1-800-337-444. |
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Do
I have to have an account with the Bank to have one of their
Cards? |
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No. The
Bank will check your
credit history upon application, and you do not have to have any
accounts with them in
order to qualify for the card. |
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Who
can I turn to if I need help managing my Card debt? |
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If you
find yourself getting into
trouble with your credit card debt consider transferring the
balance to a personal loan.
The interest rate will be cheaper.
Also contact:
The Consumer Credit Legal Centre's
"Financial Counselling Service Tel: 9212 4111
Credit Help Line Tel:1 800 808 488 |
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I
am not eligible for a credit card, is there any card I can use
which offers me similar
benefits? |
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Yes,
think about applying for a debit
card. The card looks and acts like a credit card but the
money is coming directly out of your account. |
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How
are Credit Union cards different to normal banks? |
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Credit
Unions operate as non
profit organisations, this enables them to pass back any savings
directly to their
members. You will find that their credit card interest rates are
lower than other
financial institutions. |
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Click here
for
brochure request
and application
details. |
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What
is the
difference between a credit card and a charge card? |
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A
credit card allows you to carry
a balance from month to month and charges interest accordingly. A
charge card must be paid
off in full every month. |
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Who
uses charge
cards? |
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Businesses
whose staff travel
frequently, often provide them with an American Express Card or
Diners Club card. It is a
convenient way to manage travel and other business related
expenses.
People who are interested in Loyalty programs. American Express
and Diner's Club both
offer loyalty programs which reward usage with free flights,
accommodation and other
miscellaneous gifts. |
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Click here
for
brochure request
and application
details. |
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How
are Fly-Buys different from other loyalty programs? |
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- You do not need to have a
credit card to be a member of the
Fly-Buys program. Have the card on its own or in conjunction
with a National Australia
Bank credit card.
- The Fly-Buys program offers
points when you shop at certain
retailers (click
here to see the list). The program
is different in that you accumulate points regardless of how
you pay for your purchase.
With other loyalty programs you must pay with the associated
credit card.
- For example you may choose to
have a Fly-Buys card on its
own and accumulate points (at the specified retailers)
whether you pay with cash or
credit. If you choose to link your National Australia Bank
credit card with Fly-Buys then
you earn 1 extra point for every $5 charged to the card.
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Which
loyalty cards offer flights as rewards? |
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| American
Express |
Global
Rewards (Westpac) |
| Citibank Rewards |
Qantas Telstra Visa (ANZ) |
| Diners Club |
Telstra Visa (ANZ) |
| Fly-Buys |
Volvo (Commonwealth Bank) |
True Awards
(Commonwealth Bank) |
BankWest Extra |
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I am
not a member of a frequent flyer program. Do I
need to be a member of the card's partner frequent flyer program
to claim a flight reward? |
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| Citibank
Rewards |
No |
|
American
Express |
Yes Qantas or
Air New Zealand |
| Commonwealth
Bank True Awards |
No |
|
Diners
Club |
Yes Ansett |
| Qantas
Telstra Visa |
No |
|
Global
Rewards |
Yes Ansett |
| Telstra
Visa |
No |
|
Volvo |
Yes Air NZ |
| BankWest
Extra |
No |
|
National
Gold Rewards |
Yes
Qantas |
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Click
here to see the list of Airline Partner Airlines and Joining
fees. |
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Which
loyalty cards offer cars as rewards? |
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Click
on the underlined name to
see the model range. |
| AMP |
Subaru |
| American Express |
Mitsubishi
and Mercedes |
| GM |
Holden |
| Telstra
Visa |
Nissan |
| Volvo |
Volvo |
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Which
Loyalty Cards that have no time limit for accumulating points? |
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| American
Express Charge |
| American
Express Blue Credit Card |
| Citibank
Rewards |
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Which
cards offer a points plus pay option? |
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A
loyalty card which offers a
points plus pay option allows you to pay plus redeem points in
order to claim your reward. |
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| Citibank
Rewards |
Telstra Visa |
| Qantas
Telstra Visa |
Volvo |
| BankWest
Extra |
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This option is good
if:
- You want to claim your reward
sooner and are willing to pay
part of the cost.
- You want to claim your reward
but don't think you will have
enough points before the time cap. (Remember, the time cap
does not apply to American
Express or Citibank).
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What
are Bonus Points? |
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Bonus
points are additional
points added when you make purchases at specified outlets. There
are nine Loyalty Cards
that offer bonus points to cardholders - American Express,
BankWest, Citibank, Fly-Buys,
Telstra Visa, Qantas Telstra Visa, True Awards, Volvo and
Westfield.
When comparing the various loyalty programs, we did not include
bonus points. We suggest
that you take a look at the list of bonus
outlets by
card to see if you already shop at these places and will
therefore be able to take
advantage of the bonus points. |
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The
more points awarded per dollar the more valuable the loyalty
program? |
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This is
definitely not the case.
Each card has a different way of accruing points and awarding
the rewards. Our analysis
has taken all of these factors into account.
The reward ratio is a better indication of the average value of
rewards in the program.
However, the reward ratios within each program vary greatly, so
we have chosen to analyse
three types of rewards (flights, cars & shopping) rather
than the whole program. |
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What
is the main difference between the Qantas Telstra Visa and the
Telstra Visa Card? |
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The
Telstra Visa Card offers two
rewards that the Qantas Telstra Visa Card does not - a rebate on
a new Nissan and shopping
vouchers. Also, if you spend over $1,500 per year on the Telstra
Visa Card then there is
no annual fee.
The Qantas Telstra Visa Card lets you transfer your points to
the Qantas Frequent Flyer
program if you are a frequent flyer member..Both the
Telstra Visa Card and the Qantas Telstra Visa card offer flight
rewards without requiring
you to be a frequent flyer member. |
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Click here
for
brochure request
and application
details. |
|
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|
How
are Gold Cards different from ordinary Credit Cards? |
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Gold
Cards offer cardholders some
or all of the following benefits:
- ability to withdraw large sums
of money
- free travel insurance
- extended warranties
- free purchase protection
insurance
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Which Gold Cards offer
Comprehensive Travel Insurance? |
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Some
Gold Cards offer
Comprehensive Travel Insurance. If you travel overseas for
example every year, this
benefit can save you a lot of money in travel insurance. Note:
Comprehensive Travel
Insurance is different from Travel Accident Insurance. Travel
Accident Insurance covers
you for loss of life or limb while travelling between
destinations. Comprehensive Travel
Insurance covers you for sickness, loss of luggage etc. |
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| Cards
with Comprehensive Travel Insurance |
Card
Type |
| ANZ Premier Gold Visa Card |
Gold |
| Citibank Gold Visa |
Gold Loyalty |
| Commonwealth Bank True
Awards |
Gold Loyalty |
| Westpac Gold MasterCard or
Visa |
Gold |
| Westpac Gold Global Rewards
Visa |
Gold Loyalty |
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Which
Loyalty Cards come in Gold? |
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| Loyalty
Cards which come in Gold |
| ANZ
Telstra Visa |
| ANZ Qantas
Telstra Visa |
| Commonwealth
Bank True Awards |
| Commonwealth
Bank Gold Volvo |
| Citibank
Rewards |
| National
Australia Bank |
| Westpac
Global Rewards |
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