Did you know you may be eligible for a Repayment Holiday on your variable home loan?
A Repayment Holiday is when you’ve built up enough buffer with your funds (available redraw) from making extra repayments on your home loan. This buffer allows you to stop or reduce the amount of loan repayments as the available redraw can cover your scheduled home loan payments.
Our Repayment Holiday option enables you to take a break from your mortgage loan repayments for up to six months and gives you more flexibility to suit changes to your lifestyle, whether they're planned or unplanned. It allows you to free up funds to use as you wish - to take a holiday or purchase a large item.
By drawing down on the advanced status of your loan for the holiday period at its completion you will simply return to your scheduled repayments.
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Graham and Belinda took out a First Rate Standard Home Loan three years ago to purchase their home. Over the last two years they have been paying more than their required repayment amount every fortnight. Consequently, the extra funds have built up over time and now they have a substantial amount of advanced funds (over repayments) sitting in their home loan.
Belinda is now pregnant and plans to take nine months maternity leave, however her job will only pay her for three months. Graham and Belinda want to maintain a similar level of income after Belinda has the baby, so they contact us and arrange to put their home loan repayments on hold for six months once the baby is born. During that time we'll use the extra amount in their advances to deduct the home loan repayments. So, after the six months, the total pool of available advances will be less.
It's important that during the six month Repayment Holiday period Graham and Belinda don't make any significant redraws. If they do it may mean that they'll need to increase their fortnightly repayments when the Repayment Holiday is over, in order to repay the loan within the agreed term.