What is a Home Loan Repayment?
Last updated 20 August 2015
Your home loan contract sets out your obligations during the contracted loan term, expressed as monthly repayments.
Your Required Monthly Repayment Amount (RMRA) is the minimum amount you must pay each month under your home loan contract, based on the loan balance, interest rate and contracted term and includes the Loan Service Fee (LSF) if applicable. We regularly recalculate your RMRA to make sure the amount you are repaying is sufficient to repay your loan within the agreed loan term. For example, if interest rates have increased, or you have completed an introductory rate period your RMRA may need to increase. If they do, we will send you a home loan statement with a letter outlining the increase and the date this will take effect. In many cases customers already pay more than their required amount, meaning their existing repayments may be sufficient to cover the new RMRA.
How do I change my repayments:
You can change the amount you repay provided the amount is greater than your Required Monthly Repayment Amount. You can change your repayments in NetBank by going to "Manage my accounts" page and choosing "Change my loan repayment amount" then follow the prompts. You will receive a statement every time your repayments are changed.
What repayment options do I have:
You can choose to make your Home Loan Repayments monthly, fortnightly or weekly where eligible. However, if the loan is an Interest Only loan or Construction loan that is not fully funded repayments must be monthly. By making repayments weekly or fortnightly, the loan balance is reduced in advance of a monthly repayment and as a result the interest charged to the loan is reduced. Also, if you choose fortnightly repayments you'll pay half of your monthly repayments each fortnight. Because there are 26 fortnights every year, this is equivalent to making an extra month’s repayment each year. These options can lead to substantial savings over the life of the loan and can reduce your loan term.
You can also choose to make Principal & Interest repayments or Interest Only payments where eligible. An Interest Only option allows you to pay only the interest on your loan over an agreed period of time. This payment option may be useful for property investors because it maximises the investor’s tax deductions, Interest Only payments are slightly lower than Principal & Interest payments however do not reduce the home loan balance.
Principal & Interest loan repayments are slightly higher than Interest Only payments as the principal and interest are repaid together for the term of the loan, meaning your home loan balance is reducing over the contracted term.
How can I make repayments:
Our preferred method is for Home Loan repayments to be made via a direct debit from an account nominated by you. You can also make repayments to your home loan via NetBank's "Transfer Money" function depending on the type of home loan you have.
If you have a Standard Variable Rate loan there is no limit to the amount of additional repayments you can make. If you have a Fixed Rate loan you can make additional repayments up to a maximum of $10,000 per year from the loan funding date or fixing date. Additional repayments that exceed $10,000 per year may attract an Early Repayment Adjustment (ERA).
What if I am unable to make repayments:
You may be eligible for a Repayment Holiday of between 3 and 12 months if you have accumulated sufficient additional repayments on your loan. If you are unable to make your home loan repayments you should contact us to discuss your options.
Talk to us:
To discuss Repayments further you can contact us on 13 2224 between 8am and 8pm, 365 days, or visit any Commonwealth Bank branch.