All banks offer a Standard Variable loan. This is usually a fully featured loan at a rate that’s around 0.5% higher than their Basic Variable rate. Lenders have always given introductory or honeymoon discounts on this Standard Variable rate, but just for the first year of the loan.
Years ago they began giving permanent discounts based on what they considered stable and profitable professions—typically to Doctors, Lawyers, and Accountants. In fact, these discounted loans are often still referred to as “professional packages”.
Some lenders offer packages which are branded to different industry groups, such as teachers or nurses. It is important to know that just because a loan has the name of your industry on it, it does not mean it’s the cheapest loan you can get. This is usually a savvy marketing ploy by a lender to get you to take a mental shortcut and assume this is a better offer because it is ‘tailored’ to the needs of your profession.
In reality I typically find that whilst these loans are an improvement on the bank’s standard loans, cheaper alternatives are readily available, often with the same lender. Certainly consider these options, but no more than any other loan you are comparing – always look at the final cost.
Virtually every lender offers a discount package that most of their borrowers are eligible for. These packages go by many different names, including “Wealth Package”, “Advantage Package”, “Breakfree”, “Wealth Plus”, “Mortgage Advantage”, “Choice Package”, and many more.
In more recent years, as well as these professional packages, discounts have been based on the amount that people borrowed—the larger the loan the bigger the discount. Different lenders offer very different discounts at different loan amounts. Since the Global Financial Crisis, a new category of discount loan has emerged—I call them “Safe Borrower” loans.
When you organise a loan through a reputable broker, they will know all of the discount packages you are entitled to and determine which is the cheapest loan overall. They can make sure you get the best discount package you qualify for that your current lender may not be telling you about.
If you aren’t borrowing enough to be eligible for a discount package or don’t fall into the right profession, don’t worry, there is in recent years a new type of discount package — one that makes it all the more important to keep reviewing your lending options as I’ve described previously.