Home loan repayment options to help manage your household’s cashflow
We understand that unexpected life events can have a huge impact on your household income and we want you to know that, if this ever happens, we’re here to help.
2 minute read
What’s in this article:
- Reduce your home loan repayments
- Use your prepaid funds to take a Repayment Holiday
- Change to an Interest Only (IO) repayment term
Whether you’re a home owner or property investor, facing financial hardship can arise from different events such as losing your job or income (including rental income), illness, a relationship breakdown, reduction in your business cash flow or emergency events like natural disasters. If you believe you are facing financial hardship, find out how Bank of Melbourne Assist can help you.
If you are not facing financial hardship but need help to ease financial pressure to get back on your feet or need some breathing space to free up some cashflow during uncertain times, below are four flexible options which may suit you.
Please remember to consider all these options based on your individual needs and if you think any could work for you, get in touch through the Bank of Melbourne Mobile Banking App or call us on 13 22 66.
If you are overseas, please call +61 3 8536 5719.
Mon - Fri 8:00am – 8:00pm (AEST), Sat 9:00am – 5:00pm (AEST).
Option 1: Repayment Reduction
Going through a key lifestyle event, like parental leave? You could apply to lower your minimum repayments by up to 50% for a term of 3 to 12 months.
Conditions, eligibility and suitability criteria apply.
- At the end of the term, your minimum repayments will increase to ensure you repay your loan within its original term.
- Interest is capitalised. This means whatever interest you would've normally paid during the Reduced Repayment term will continue to accrue and be added to the balance. So your outstanding balance will increase, and you'll pay more interest over the life of the loan.
- You can use this feature up to twice during the life of the loan, and we’ll need to assess your eligibility.
Option 2: Repayment Holiday
Need some breathing space? If you’ve already made extra payments towards your loan, you could arrange to miss a payment or make a reduced payment.
Option 3: Change your home loan to Interest Only (IO)
Are you currently making Principal and Interest repayments? You may be eligible to switch your loan to Interest Only and only pay interest during the approved IO term.
The Detail
This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice.
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Repayment options: Conditions, eligibility and suitability criteria apply.
- Reduced Repayments: Reduction of up to 50% available for 3 to 12 months on variable home loans held with us for over 12 months. It is important to understand that at the end of the reduced repayment period, the repayment amount will increase to adjust for the reduced repayments. This ensures that the loan is still repaid within its original term.
- Repayment Holiday: If you’ve made extra home loan repayments in the past and you’d like to take a break, you could consider choosing to miss a payment or make a reduced payment, provided the available funds are enough to cover the scheduled payment.
- Switching to Interest Only repayments: It’s important to understand that interest rates for loans with Interest Only repayments are higher. Your repayments will increase at the end of the Interest Only period as the amount you’ve borrowed will need to be paid back in a shorter timeframe. This also means you’ll pay more interest over the life of the loan on Interest Only repayments than if you’d opted to continue paying principal and interest.