Nila Sweeney

No doubt you have heard to be careful to pay only for the bells and whistles you need when securing a home loan, but what if you could get them for free? Trent Lee explains.

If you’re thinking about taking a mortgage for $250,000 or more, you might want to consider the option of getting a professional package.

A professional package can wipe thousands of dollars in interest off your home loan and many years off your loan term – just by choosing your loan more carefully.

I like to call it getting a Ferrari for the price of a Hyundai.

Of course, you may have read or heard wild claims similar to this one. But, hopefully, you will learn in this article about how it can be done and the reasons it works.

A Ferrari with a Hyundai price tag 
When the banking sector was deregulated in the 1980s, local banks got something they weren’t used to – competition. Since then, banks have sought to have the competitive edge on the lender down the road. This was the situation in the late 1990s.

Rather than focusing purely on marketing tricks, banks decided to selectively pursue borrowers they considered to be low-risk, high-debt customers. While determining who these people were, banks realised this group was generally made up of professionals such as accountants, solicitors, doctors, chemists and teachers.

The banks decided to offer a discounted range of products and services to these professionals as a reward for high-quality, high-profit business.

These products and services were bundled up as a special package and the term professional package was born (since shortened to pro pack).

Of course, time has moved on and competition has continued to increase. Although the term pro pack stuck, the classic delineation of its being provided to professionals has mostly been abandoned, with discounted, packaged banking now available to anyone who wants it and appears able to repay a large debt.

What is a pro pack? 
The pro pack is not a loan type. It is an overarching product that offers a range of discounts while allowing you to continue to pay an ongoing monthly or annual fee.

This fee is $300–395 a year ($25–33 a month). Although this ongoing fee may appear to be excessive, the compensation is in the potential interest savings for the right-sized loan.

It should also be considered that this single fee can result in a range of fee waivers, so other general banking charges that you might otherwise pay are often reduced or eliminated altogether.

Although there are a range of less apparent and, at times, questionable benefits, the most significant and obvious advantage for most people is a discount off the standard variable rate.

For lenders, the size of the discount is generally linked to the size of your overall borrowings. However, brokers such as Mates Rates Mortgages pass on 100% of the ongoing commission regardless of your loan amount.

Although pro packs are available regardless of your loan amount, discounts are often uneconomical for loan amounts below $250,000 due to the high monthly or annual fee you will be required to pay.

Generally speaking, a pro pack includes the following:
  • interest rate discounts on variable rate home loans
  • up to four credit cards with no annual fee
  • free or discounted offset and savings accounts
  • discounts on insurance including building, income protection and landlord protection insurance. Some offer discounted car insurance
  • fee waivers or reductions on valuations, top-ups and switches
Pro pack or basic? 
So is a pro pack right for you or would you be better off in the long run opting for a basic home loan?

Although it’s dangerous to generalise, you can use the following criteria to determine whether or not a pro pack would be the right option in your particular situation.

A pro pack might not be the best option for you in certain circumstances. Consider carefully if you:
  • are interested in having a variable rate mortgage
  • are borrowing less than $250,000
  • only have one security property
  • have no personal borrowings
  • don’t use a credit card
  • have no plans to make any changes to your loan structure

Note, if you fit into the previous category, it’s prudent to crunch the numbers, anyway – just to be sure.

On the other hand, a pro pack may be suitable for you if you:
  • are borrowing more than $250,000
  • are likely to make changes to your borrowing
  • use a credit card
  • require more than one split
  • might add some fixed rates into the mix

If you want to simplify the management of your money, or you would like to maximise savings through interest offset features, the answer is probably also ‘yes’ to having a pro pack.

As an additional bonus, in the last decade mortgage brokers have emerged that pass on to the borrower the mortgage rebates from commissions paid to them by the lender. As the products and rates offered by the broker are the same as retail, mortgage rebates reduce the effective cost of your loan in contrast to dealing with lenders directly.

The recent changes to individual interest rates charged by lenders together with changes to commission structures paid to brokers have redefined the value difference between the pro pack and the basic loan.
Although there was once a clear price advantage in having a pro pack, this distinction no longer holds true as a matter of course.
Comparative 5-year costs for pro packs and non pro packs


Non pro pack basic alternatives

Pro packs


Aussie Basic

ING Mortgage Simplifier

St. George Bank Advantage Package

Resi Pro

ANZ BreakFree

Discounted rate 5.19% 5.19%
Note: for loans >$300,000, a $499 fee for the Smart Pack includes an additional 0.06% pa discount
to 5.13%
5.19% 5.17% 5.31%
Note for loans >$700,000, the rate is discounted 0.70%
to 5.21%
Mortgage rebates* Nil 0.15% pa 0.15% pa Nil Nil

Cost for five years



















*Correct as at 30 March 2009

Crunching the numbers
It’s critical that your loan structure is suitable for your needs and this should be your first priority. This ensures you don’t lose time and money working with a product that just doesn’t want to work with you.

The structure is a functional concept as different lenders may have different names for each feature and their structure might also include soft features such as lender reputation. However, once you have determined these features, the only thing left to do is crunch the numbers.

Let’s take a look at five lenders with reasonably strong reputations in the market which profess to have products that are among the most competitive in the market. Two such products are basic variables, two are true pro packs and the fifth, the Resi Pro, is a type of Claytons pro pack. An explanation: if you’re not old enough to remember Claytons, it was a scotch-coloured non-alcoholic drink, packaged in scotch-like bottle. Its slogan? “It’s the drink I have when I’m not having a drink.’

Although Resi may be well intentioned, its flexibility on pricing and ancillary benefits fall short of those of most of its competitors.

Two of these five lenders, ING and St.George, are accessible through mortgage brokers that offer borrowers mortgage rebates.

The results for three different loan amounts are shown in the table above. This table demonstrates the overall fee and interest cost less mortgage rebates, based on interest-only payments for each of these lenders, and including minimum ascertainable fees.

Establishment fees including the initial annual fee are capitalised on each loan amount to create parity. Costs calculated assume mortgage rebates are credited to the loan facility.

There are two clear standout winners, the ING Mortgage Simplifier and the St.George Advantage Package. The St.George solution is a pro pack, whereas the ING solution is not.

Both lenders have solid reputations in the marketplace, have a relatively stable rate history, both are eligible for mortgage rebates from brokers and both produce significantly better financial outcomes than the other three competitors listed here.

The question is: if the choice was down to the two, which would you choose?

To the innocent observer, the ING appears to result in a dramatically lower cost outcome, yet this is not really the case. Here are two key reasons why.

1. The ING product requires you to hold a bank account elsewhere, whereas the St.George solution does not. The raw maintenance cost for this account would be around $8 per month or $96 per year.

Across five years you will need to add a further $480 to the ING cost. Similarly, annual credit card fees should be added and any additional transaction fees a pro pack includes in the annual fee.

2. If you are manually managing repayments, extra payments and redraw, there is a hidden cost in time with the ING solution that is not factored in here. Interest advantage is also lost while funds transfer between the different institutions.

Additionally, you may tend to hold funds in the separate bank account to avoid the transfer delay which are not offsetting your home loan balance. Even worse, a mistimed transfer may result in default fees or interest for a late payment.

When considering these two products with a more neutral view, the gap between the ING and St.George products will be less. However, it is difficult to quantify and may be eroded more by broker negotiation with lenders to obtain further, individual discounts for loan amounts of $750,000 or more.

This is likely with a professional package, but extremely unlikely with a basic loan. On loan amounts $750,000 and above, a good broker, with stronger buying power than you as an individual, will be able to negotiate a further discount of between 0.05% and 0.2% pa over and above the discounts used in this article.

Other savings may also be possible through these four aspects:
1. Fee waivers for your credit card, rewards program, additional split and additional valuations charges for new properties or increased borrowings
2. Properly utilised offset facilities for your personal borrowings
3. Other discounts on ancillary products such as insurance and financial planning services
4. Unvalued time and actual interest savings through single point banking

Dealing directly with lenders
Clearly, ongoing mortgage rebates create a significant savings opportunity, but you may choose to deal directly with the lender, or a broker that does not offer rebates.

Without mortgage rebates, the pro pack, which includes far more flexible features and bonus ancillary services, is the standout winner almost every time. Once again, the more you are borrowing, the more dramatic the savings become.

The table on comparative 5-year costs for pro packs and non pro packs demonstrates the overall fee and interest cost after five years, without mortgage rebates and based on interest-only payments for each of these lenders and including minimum ascertainable fees.

Your choice
This is a fairly basic comparison between just five lenders and their products that are available today, but you need to know that there are hundreds of products available.

Whether or not a pro pack is right for you comes down to your individual situation and must include consideration for your loan amount, your current and future needs, and the mortgage market at the time you are seeking funds for refinance or purchase.

There is little doubt that a pro pack will save you money if you’re happy paying retail prices.

However, if you are smart about it, you are likely to pay far less than retail with the benefit of mortgage rebates and loan discounts from pro packs if your loan is higher than $250,000.

If your borrowings are above $750,000 and your broker can negotiate further discounts on these amounts, a pro pack and mortgage rebate combination will get you close to 1% below standard variable and include a range of ‘bonus’ features such as fee free banking, credit cards and offset accounts.

Savings without mortgage rebates

Borrowing amount

ING Mortgage Simplifier

St. George Advantage Package










Trent Lee is the founder of Mates Rates Mortgages. For more information, visit or call 1300 55 81 61. All the views expressed here are his own.

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