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Make extra repayments to pincipal VS increase available balance

Posted by Constantin Constantin
Message 1 of 2 324 Views

Hi,

If I make a one-off extra repayment to my variable home loan, will it go towards repaying the principal or increasing the available balance?

It it goes towards the available balance, what is the process to actually allocate it to repayment of the principal?

Also, once in the available balance, can that amount be redrawn? Or does it just sit in the home loan account as it would in any offset account?

Many thanks

Constantin

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Re: Make extra repayments to pincipal VS increase available balance

Posted by MegB MegB
Message 2 of 2 273 Views

Hey @Constantin thanks for reaching out. 

 

1) It will sit in the available balance of the loan offsetting the interest charged.

 

2) To use the funds in the available balance to reduce the principal of the loan, we'll need your request in writing. Please compose a letter containing:

  1. All customers related to the home loan account full names and their signatures                  
  2. Full home loan account number                                                                                      
  3. Effective date for this request to be actioned, i.e. on receipt of these instructions being received                                              
  4. Date the request is being lodged with the Bank                                                                                                    
  5. Exact amount the loan is to be reduced by and the new limit required      

Once signed by hand, this can be attached to a BankMail through the 'Message centre' of your online banking for processing. 

 

3) Funds in the available balance can be withdrawn, funds used to reduce the principal cannot.

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