Loan Tip: Redraw and Repayment Holidays

Watch out if you have redraw available on a home loan and request a repayment holiday. At least one bank, Commbank, has said they will ‘take’ the repayments from the available redraw amount and even suggest borrowers redraw any amount available via redraw before they request the repayment holiday – and put this in another account. So this could be a repayment holiday without the holiday!

• Any available redraw you have will be drawn on first during the 6 month support period. If you need to access your redraw during the support period, transfer your available redraw to another account now

From Support for Home Loan Customers - CommBank (on 29Mar2020)

Also consider the tax consequences if you redraw money now.

 

Hi Terry do you know how banks will treat cash in offset account? I.e you have savings but ask for a payment holiday in the hope you can maintain the savings.

 

No indication that they will take offset cash into account

 

Its also possible a lender will look at any loan deferral request etc and look at existing balances and just reject the request arguing that the offset demonstrates there is a suitable capacity at present. Many lenders may ask some basic income, asset and liability questions. Crazy if they didnt. They want to help affected customers. Its like applying for benefits if you might lose your job.

 

Using redraw from IP loans for personal use- would this not create blended loans? Having to apportion one of these a few years ago- basically a nightmare.

 

CBA have suggested it when they wrote:
" If you need to access your redraw during the support period, transfer your available redraw to another account now:

 

It would, but interest can be apportioned or loans split.