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Rates fly with points

HOMEBUYERS could be paying a premium when taking out a home loan which includes free frequent flyer points, according to a Perth mortgage broker.

The frequent flyer points are often packaged with home loans with less flexibility and a higher interest rate.

Mortgage Masters director Peter Gomm said a home loan offering frequent flyer points typically offer a variable interest rate of about 7.57 per cent. By comparison, a basic variable rate can be secured for about 6.97 per cent.

Mr Gomm said it was important to factor in how much additional interest was paid over the life of the loan before making a decision.

“For example, a loan of $150,000 over 25 years at an interest rate of 7.57 per cent would cost the borrower about $334,599 in total repayments but an interest rate of 6.97 per cent would see this figure fall to $317,190,” he said.

BankWest head of alliances, Steve Carre defended the bank’s Jetaway home loan which provides ongoing frequent flyer points based on the outstanding balance of the loan saying it proved popular with people who wanted to travel.

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