Should You Switch To a Package Home Loan When Refinancing?

Refinancing into a package home loan only makes sense if the interest rate discount and features save you more than the annual fee, and those features match how you actually use money. For many Australians, a sharp basic loan is better; for larger or more complex portfolios, a package can more than pay for itself.

This guide shows you how to make a clean, numbers‑based decision in under a week.

Line up basic and package loans on the same numbers before you refinance.

1. What is a package home loan, really?

A package (often called a professional package) is a home loan bundled with other banking products – usually a credit card, offset account, and fee waivers – in exchange for an annual fee.

Typical package inclusions:

• Ongoing interest rate discount off the bank’s standard variable rate
• One or more 100% offset accounts
• Annual fee waiver on a linked credit card
• Waiver or reduction of application / valuation / monthly account fees

By contrast, a basic home loan usually has:

• Lower (or no) annual fee
• Fewer features – often no offset, limited split options
• A competitive but sometimes slightly higher rate than a discounted package

When refinancing, your question is simple: Does this package save cash and improve flexibility, after fees and your real behaviour?

For how to run regular checks on your current loan before you jump lenders, see /insights/how-often-review-and-reprice-your-home-loan.

2. Package vs basic: run the numbers, not the marketing

2.1 Side‑by‑side cost example

Assume:

• Owner‑occupied P&I loan: $750,000
• Remaining term: 25 years
• Rates and fees are illustrative only – not current offers.

Repayment comparison (approximate):

• Loan A (6.10%): about $4,871/month
• Loan B (5.90%): about $4,788/month

That’s a saving of roughly $83/month or $996/year in interest with the package rate.

Now adjust for fees:

• Package annual fee: –$395
• Saved credit card annual fee: +$120
• Avoided monthly account fees (12 × $8): +$96

Net annual saving:

• Rate saving: ~$996
• Fee impact: –$395 + $120 + $96 = –$179 (net cost)
• Net benefit: $996 – $179 ≈ $817 per year

Over three years, that’s roughly $2,400–$2,500 better off with the package – if you use the offset and card features as assumed.

2.2 When a package clearly makes sense

A package usually stacks up when:

1. Loan size is large (often $500k+). The percentage rate discount produces meaningful dollar savings.
2. You’ll use at least one offset account to hold savings or buffers.
3. You already run a fee‑paying credit card and will switch it into the package.
4. You want the flexibility to add or reshape splits, especially if you’re planning to invest, renovate or consolidate later.

If your loan is small (say $250k) and you keep almost nothing in offset, the fee can eat most of the discount.

For a detailed way to compare total cost, not just rates, see /insights/brokers-compare-total-loan-cost-not-just-rate.