Choosing a home loan is a very important decision. If you’re an avid points collector, it can be tempting to choose a home loan that comes with bonus frequent flyer points. But are the extra points really worthwhile?

Currently looking for a home loan. All things being equal, keen on looking around for what sort of point bonuses we can get? Any advice or hot tips?

There are currently several banks offering bonus points when you take out a home loan. Macquaire Bank and Qudos Bank offer loans that earn Qantas points, while Virgin Money sells loans that come with Virgin Australia Velocity points. NAB is also currently promoting a loan with a one-off bonus of 350,00 NAB Rewards points – equivalent to 175,000 Velocity points.

The number of bonus frequent flyer points on offer can be significant. But they do come at a cost. Loans with frequent flyer points generally don’t have the best interest rates. This matters because a difference in interest rates of just 0.25% can add up to tens of thousands of dollars over the life of the loan!

Over the life of an average home loan, chasing points at sign on time probably should not be a high priority-maybe I am just an old fart?

Another member adds…

Don’t be sucked in by an offer of points. Go for a product/rate that suits you. For me Ubank with 3.74% and no fees at all was perfect.

In our member’s case, NAB’s interest rate is only 0.01% higher and comes with 175,000 Velocity points. NAB also offers, as do most of the major banks, a fee-free high-end credit card to home loan customers. These cards often have annual fees of $300-$400, so this is a worthwhile benefit.

NAB to date has offered 3.75% (not that far off) and a $300 a year fee ($295) – which gets us the 350,000 points, 1 valuation a year and no fees to restructure, refinance etc on an offset account (well as many offsets as we want – I think the limit is 6)

Nonetheless, it is important to do the maths and work out just how much extra will be paid over the life of the loan, compared to taking out a mortgage with a lower interest rate. The extra points may or may not justify the higher fees and/or interest rate.

Join the discussion HERE.

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Matt Graham
The editor of Australian Frequent Flyer, Matt's passion for travel has taken him to over 60 countries… with the help of frequent flyer points, of course!
Matt's favourite destinations (so far) are Germany, Brazil, New Zealand & Kazakhstan. His interests include economics, aviation & foreign languages, and he has a soft spot for good food and red wine.

You can contact Matt at [email protected]