Mortgage Options.

Choose fixed, floating or a combination of both

The following information is designed to help you understand and decide which rate option will suit you best. It explains the benefits of, and differences between,  the two types of interest rate options available with home loans – floating rate and fixed rate.

There are a variety of home loan types:

• Floating (can be transactional)
• Fixed

Floating rate

• The Floating Rate Loan is very popular with customers, allowing them to pay their salary directly into the account, helping to minimise interest charges.
• A floating interest rate can move up or down according to what's happening in the market.  This means that your repayments may increase or decrease.
• The advantage of having your home loan at a standard floating rate is that you have maximum flexibility, enabling you to increase your repayments or make lump-sum repayments at any time without penalty.

Fixed rate

• With the Fixed Rate Loan the interest rate on your home loan is guaranteed not to change for a specified period.
• There are a number of fixed interest terms available for you to choose from, ranging from six months to five years.
• If market conditions change and interest rates move up or down, your interest rate and the amount of your repayments will stay the same during the fixed interest rate period of your home loan even if rates decrease. This means you are shielded from any rise in interest rates and have the assurance of knowing how much you will pay for the fixed interest rate period.
• Within each fixed rate term, you may increase the principal repayments on your fixed rate loan by up to a further $1000 per month or $500 per fortnight without penalty, provided you maintain the increased repayments for the remainder of the fixed rate period.
• At the end of the specified fixed rate term, your home loan interest rate automatically converts to the standard floating interest rate applying at that time.
• If you decide to repay in full, make additional lump-sum payments or convert to a floating rate home loan or to another fixed rate before the end of the fixed interest rate term, an Early Repayment Adjustment (ERA) fee may apply.

Interest repayment options

• Principal and interest: Your regular loan instalment pays all of the monthly interest plus a portion of the principal amount of the loan. Over time, as the amount borrowed reduces, the interest charged reduces as well, so more of your regular monthly payment reduces the outstanding loan amount.
• Interest only: You may apply for an interest-only period of up to 60 months. During the interest-only period, your regular loan instalment covers only the interest, calculated on the outstanding daily actual loan balance. At the end of the interest-only period, principal and interest payments will commence to ensure your loan is repaid in full within the loan term.

Lump-sum repayments

How you make lump-sum payments is dependent on the type of loan you have:

• Floating Rate Loan: At any time, you can make an additional lump-sum payment into your Floating Rate Loan account.
• Fixed Rate Loan: You may also make lump-sum payments to your Fixed Rate Loan, however, a minimum amount may of be required, and an Early Repayment Adjustment may apply.

Early Repayment Adjustment fees

• An Early Repayment Adjustment Fee may apply if one or more of the following occurs on a Fixed Rate Loan: the loan is repaid in full; the loan is partially repaid by way of a lump-sum reduction; the loan is ‘broken’ to a floating rate or another fixed rate.
• The adjustment will depend on movement in market interest rates since the fixed rate was applied, the amount of time remaining on your fixed rate loan and the amount repaid.

Other loan options

• Split loans: You may prefer to get the best of both worlds by opting for a split between fixed and floating rates. For example, if you put 75% of the loan on fixed rate and 25% on floating, this would give you certainty around repayments for the majority of your loan, but the flexibility to repay the smaller portion if you were to accrue additional funds (such as an annual bonus).
• Loan holidays: With a most Home Loans you can apply to take a break from your repayments for up to three months*. However, interest will continue to accrue on your outstanding principal during this 'holiday'. At the end of your repayment holiday your repayments are increased to ensure your loan in repaid within your original loan term.  There must also be a minimum of 12 months between the expiry of a 'loan holiday' and the beginning of another.
• Top up your home loan: With some Home Loans, there's no need to sacrifice your lifestyle, because as you repay your loan, you can apply to borrow more*, using your existing property as security. Buy a new car or renovate your home. You can even take a holiday. The choice is yours.