When you fix your entire variable home loan:

• you'll no longer able to link a 100% offset account to your home loan
• you'll no longer be able to make unlimited fee-free extra repayments, as there’s a fixed term break cost¹ if you prepay more than $30k
• during your new fixed rate term, you’ll be able to make extra repayments up to $30k without a break cost¹, (though you’ll be able to redraw all of these funds anytime, with no redraw fee²).

So beforehand, it's important to consider what you’d like do with any funds in a linked offset account, and any redraw funds available in your home loan account.  

If you have offset funds

Do you have a Bank of Melbourne Complete Freedom offset account linked to your variable home loan? Before fixing, you’ll need to decide what you’d like to do.

Transfer into variable loan

• You can transfer an unlimited amount into your variable home loan as an extra repayment.
• When you fix, this extra repayment will be ‘temporarily absorbed’ into your fixed rate loan, and can only be accessed at the end of the fixed rate term.
• The amount you owe will reduce (lower fixed loan balance).

Leave in my Complete Freedom account

• The amount you owe won’t change (same loan balance).
• Complete Freedom accounts don't earn interest and can’t be linked to a fixed loan.

Once you’ve fixed your loan, you can only transfer up to $30k in extra repayments without a break cost.
 

Example

Let’s say Ian has a variable loan, his balance is -$600k (as he has no funds available to redraw), and $100k in his linked Complete Freedom offset account.

• Ian transfers offset funds into variable loan. This reduces the amount Ian will owe on his fixed rate loan to -$500k. His recent extra repayment of $100k can only be accessed at the end of the fixed rate term.
• Ian leaves funds in Complete Freedom account. The amount Ian owes on his fixed rate loan remains -$600k. He’ll have access to the $100k in his Complete Freedom account – but it won’t 100% offset his fixed loan or earn any interest.

During Ian's new fixed rate term, he'll be able to make extra repayments up to $30k without a break cost, and redraw all of these funds anytime, with no redraw fee².

If you have redraw funds 

When fixing your loan in Internet Banking, you’ll be asked what you’d like to do with your available balance (if your redraw isn’t activated, we may ask you to call us instead):

‘Redraw funds’

• Transfer your ‘available’ redraw balance to another Bank of Melbourne account before fixing your loan (there's no redraw fee).
• Your fixed loan balance will increase.

‘Keep funds in loan account’

Your extra repayments will be ‘temporarily absorbed’ into your loan, and can only be accessed at the end of the fixed rate term.

Example

Let’s say Sam has a -$550k variable home loan balance (as she has a $50k redraw ‘available’ balance).

• Sam redraws funds. This will increase the amount Sam owes on her fixed rate loan to -$600k. She’ll have access to the redrawn $50k in another account.
• Sam keeps funds in loan account. The amount Sam owes on her new fixed rate loan remains -$550k. She can only access the $50k at the end of her fixed term.

During Sam's new fixed rate term, she'll be able to make extra repayments up to $30k without a break cost, and redraw all of these funds anytime, with no redraw fee².

Need more help deciding? Book a callback

How to redraw

Ahead on your home loan repayments? After you split your variable rate, you can pay less home loan interest on your ‘available’ funds if you move them into whichever fixed or variable account has the higher interest rate at the time. Just remember not to exceed your fixed prepayment limit, or there may be a break cost:  

If you’re doing it tough and can’t meet your regular financial commitments, please let us know. We’re here to help, and understand that life takes unexpected turns. Financial difficulty can come from events like a change in income, illness, a relationship breakdown, less cash flow or natural disasters. Eligibility criteria applies.  

The Bank of Melbourne Assist team are here to help:

• Apply online
• Call 1800 600 266, Mon-Fri 8:30am-8:00pm, Sat 9:30am-6pm (Sydney time)
   

If less income, illness, natural disaster or a relationship ending is making it hard to meet your repayments, the sooner you tell us, the earlier we can help.

A financial hardship arrangement only stays on your credit report for one year after the arrangement ends, as long as you meet the revised repayments.

Ask for help if you’re having financial difficulty: Apply online or call 1800 600 266, 8:30am-8:00pm, Mon-Fri and 9:30am-6:00pm, Sat (Sydney time).