Eternity Group

Finance & mortgage — Loan features

Home Loan Features Explained

A plain-English explainer of Australian home-loan features — offset accounts, redraw, fixed vs variable, split loans, interest-only vs principal-and-interest, extra repayments, portability and LMI — so loans can be compared on structure, not just the headline rate. The right features depend on your circumstances and lender policy.

Book a Loan Features CallSee Our Process
  • Offset account
  • Redraw
  • Fixed vs variable
  • Split loans
  • Interest-only vs P&I
  • LMI

Mr Rohan Manokaran (Credit Representative 565110) is authorised under Australian Credit Licence 561324 held by Loans Only Pty Ltd. Information on this page is general in nature and does not take into account your objectives, financial situation or needs. Credit eligibility, lender criteria, fees and charges apply.

Loan features

The features that shape how a loan behaves.

The headline rate is only one part of how a home loan works. Offset, redraw, repayment type, fixed-versus-variable mix and other product features all change what a loan costs and how flexible it is over time. Each item below is explained in general terms — the way each feature applies depends on the specific product, your circumstances and the lender's policy.

Offset & redraw

Net interest · extra repayments · access

An offset account is a linked account whose balance is netted against the loan when interest is calculated, so interest is generally charged on the difference. Redraw, by contrast, refers to extra repayments held inside the loan that may be withdrawn again under the lender’s rules. The practical difference comes down to how freely you want to move the money and how each is treated for interest and access — features, limits and fees vary by lender and product.

Fixed vs variable vs split

Certainty · flexibility · combination

A fixed rate sets the interest rate for an agreed term and gives repayment certainty, but typically limits features and can involve break costs if changed during the term. A variable rate can move over time and usually offers more flexibility. A split loan combines both. We explain the trade-offs in general terms only — we do not predict rate movements, and what suits you depends on your circumstances and the lender’s policy.

Repayment types

P&I · interest-only · extra repayments

With principal-and-interest repayments you reduce the loan balance over time alongside the interest. With interest-only you pay only interest for a period, so the principal does not reduce and repayments generally rise when that period ends — a structure that carries real risks and is not appropriate for everyone. Extra repayments can reduce interest where the product allows them. Eligibility, limits and terms vary by lender.

Other features

Portability · LMI · package vs basic

Loan portability may allow a loan to move to a new property without a full refinance, subject to lender conditions. Lenders Mortgage Insurance can apply where the loan-to-value ratio is above the lender’s threshold and protects the lender, not the borrower. Package loans bundle features for an annual fee while basic loans strip features back for a lower cost. Each of these varies by lender, product and individual circumstance.

Suited to

Who this explainer helps most.

First home buyers comparing products

Buying for the first time means weighing offset, redraw, fixed-versus-variable and LMI for the first time too. Understanding what each feature does makes it easier to compare loans on structure rather than the headline rate alone.

First home buyer

Refinancers weighing features

Borrowers reviewing an existing loan often find the question is less about rate and more about features — whether to add an offset, move to a split, or change repayment type. Knowing how each feature behaves helps frame that review.

Property investors structuring debt

Investors generally pay close attention to loan structure, repayment type and offset positioning. The features here are explained in general terms; any tax treatment is general only and depends on your circumstances, so seek personal advice.

Anyone choosing on more than the headline rate

A low advertised rate can sit on a loan with few features, while a slightly higher rate may come with an offset and flexibility that matter more for how you actually use the loan. This explainer helps you read past the rate.

How we work through it

From goals to a structure-led shortlist.

When we work through loan features with you, the aim is to match structure to your situation before any rate comparison. The sequence below keeps the focus on how a loan behaves, not just what it advertises.

Clarify your goals

We start with what you are trying to achieve — repayment certainty, flexibility, the ability to make extra repayments, an offset for everyday funds, or keeping costs lean. Goals come before products.

Map features to your situation

We map the features that matter for your circumstances — offset versus redraw, repayment type, fixed-versus-variable, package versus basic — explained in general terms so the trade-offs are clear before any application.

Shortlist loans by structure and lender policy

We shortlist loans by how they are structured and which lender policies fit your situation — not by headline rate alone. Features, eligibility, fees and repayments vary by lender and your circumstances.

Frequently asked questions

Loan features — common questions.

An offset account is a transaction or savings account linked to your home loan. The balance held in the offset account is set against your loan balance for the purpose of calculating interest, so interest is generally charged only on the net difference. For example, a balance sitting in an offset account reduces the loan amount on which interest accrues while that money is held there. Offset features, the number of offset accounts permitted and any associated fees vary by lender and by product, and not every loan offers a full offset facility. This is general information only — whether an offset account suits your situation depends on your circumstances and the lender's policy.

Where this sits

Part of the wider finance picture.

Understanding loan features is one piece of the lending conversation. The finance cluster covers the home loan, refinancing, pre-approval and first-home pathways that put these features into practice.

For an overview of how lending and accounting work together under one roof, see the finance overview. From there, the home loan, refinancing, pre-approval and first-home pages apply these features to specific situations. Everything on this page is general information only and is not personal credit advice.

How we are paid

How we are paid: Eternity Mortgage Solutions typically receives commissions from the lender for loans arranged on your behalf. A full explanation of how we are paid, our lender panel and any potential conflicts of interest is provided in our Credit Guide and Credit Proposal Disclosure document, available on request before any loan application is submitted.

Related

Where this fits in the bigger picture

Loan features sit underneath every lending decision. The home loan, refinancing, first-home and pre-approval pathways all put these features to work, and the One Roof model explains how lending and tax are coordinated.