Borrowers can make weekly, fortnightly or monthly repayments, though interest-only repayments must be monthly. You can also make unlimited additional repayments, helping you to save money interest and pay off your home loan sooner. A redraw facility is offered to suit those who have repaid any additional funds on to their loan over time. But note that the minimum redraw amount of $1000 is high and may not suit buyers who prefer to withdraw smaller amounts.
You also get the benefit of a 100 per cent offset account with this loan. This is a great way to cut interest costs as the balance in that account offsets the home loan balance, which reduces interest costs. As interest is calculated daily on your mortgage, benefits accrue as soon as there is cash in the offset account.
The loan can be taken over 30 years and a low minimum amount of $10,000 applies. There is no maximum amount on the loan. But the Commonwealth Bank requires borrowers to pay for lenders mortgage insurance where more than 80 per cent of the property’s value is being borrowed. At the end of the 12-months, the loan reverts to the bank’s standard variable rate home loan.
Giving it more flexibility than some other introductory loans, the funds can be used for bridging finance or for the purchase of land or off-the-plan apartments. You can also have a split loan, where you want to combine the certainty of fixed rate repayment with the flexibility of a variable loan. How you choose to split the loan is up to you and fees may apply.
You can also enjoy a repayments holiday, though again this will be subject to fees. The Commonwealth Bank also offers additional savings on other products such as banking, investment and insurance when this loan is taken. In addition, you can get a 90-day pre-approval on this loan to help you begin the home search straight away.
This introductory loan could appeal to both first-home and established property buyers, as well as investors and refinancers. There are many flexible features, including the interest only, split and offset features. Those wanting pre-approval to avoid the risk of missing out on their dream home at auction may like this added feature.
There’s a lot to be said for an introductory rate or ‘honeymoon’ interest rate. First home buyers like these loans because the interest rate is low and interest will easily be the biggest cost on your home loan, so the Introductory 12-Month Discounted Variable Rate Home Loan may make good sense. But care needs to be taken when considering such a loan. The benefits can seem great in the beginning, but 12 months flies by pretty quickly, and you may be stuck with a high interest rate and high ongoing fees for years to come. So arm yourself with knowledge and be aware of fees on this loan. Make sure the loan suits your needs and weights the pros against the cons after checking rates and fees offered on introductory and standard variable rate mortgage offered by other lenders.
Secure an introductory rate with Commonwealth Bank’s Introductory 12 Month Discounted Loan options.