Interest Only repayment changes
From 23 May 2016, we’re changing the way your interest only monthly repayments are charged to align to industry standard. The new interest repayment methodology will calculate interest daily on the outstanding balance for that day and charge it monthly, based on the number of days in that particular month. Repayments will continue to be monthly and the total annual interest paid remains the same.
Detail on these changes has been sent to you by post, but more information about these changes is available below, including examples and frequently asked questions.
An example of how the monthly repayment calculation (excluding any fees & charges) could work is:
|Example||Loan amount||Interest rate||Monthly Interest Charged calculation||Monthly Interest charged $ amount||Annual Interest Charged|
|Current monthly repayment calculation
Until 22 May 2016
|$100,000||5% p.a.||Annual interest divided by 12||Feb (29 days) = $416.67
Mar (31 days) = $416.67
|New monthly repayment calculation
From 23 May 2016
|$100,000||5% p.a.||Annual interest divided by 365 multiplied by the number of days in the month||Feb (29 days) = $397.26
Mar (31 days) = $424.66
Frequently Asked Questions
- Currently you pay a set amount each month as we have calculated 12 equal monthly repayment amounts that do not vary due to the number of days in the specific month.
- The new interest repayment calculation will calculate interest daily on the outstanding balance for that day and charge it monthly. You will be charged interest on the outstanding balance for the number of days in that particular month plus any applicable fees and charges.
- There is no change to your Payment cycle, Next Payment Date or Remaining Contract Term. It is only the way the monthly repayment amount is calculated that will change.