Loan Tip: Redraw and Repayment Holidays

Discussion in 'Loans & Mortgage Brokers' started by Terry_w, 30th Mar, 2020.

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  1. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    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.
     
  2. Ian87

    Ian87 Well-Known Member

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    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.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    No indication that they will take offset cash into account
     
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  4. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    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.
     
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  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    move the cash before the request

    simple but not obvious

    ta
    rolf
     
  6. Shazz@

    [email protected] Well-Known Member

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    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.
     
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Split the loans

    ta
    rolf
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    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:
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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