Financing your home

The Commonwealth Bank can not only help you with a home loan - we can also help you pay it off faster. From saving for a deposit to making your final payments, we can assist you every step of the way.

The deposit

When buying a home, the size of your deposit makes the biggest difference - the more you've saved, the less you'll need to borrow. And because you're borrowing less, your loan repayments may be lower and you may be able to pay off your home sooner.

An alternative way to find a deposit is to use equity to fund a deposit. For example, if you already have a property that is worth more than what you owe, and you have a financing option that allows you to draw on that equity, you may be eligible to reinvest some of it for personal use. An example of such a product is a Viridian Line of Credit.

A Deposit Guarantee can also be a quick, convenient and cost effective alternative to a cash deposit when purchasing residential property.

 

Saving for your mortgage

To save a meaningful deposit for your mortgage you need to budget. If you haven't already worked out a household budget now's the time to do it. If you're struggling to save a deposit, we can help you with an interest bearing savings account like NetBank Saver.

NetBank Saver is a flexible, fee-free, high-interest earning online savings account, which encourages you to save so you can meet your goals. Linked to your Streamline Account, while you're out hunting for that perfect first home, NetBank Saver earns high daily interest on your deposit savings.

 

Applying for finance

You should obtain your finance before you begin house hunting. Applying for a pre-approved loan with our Home Seeker service is simple, and having finance approved will put your mind at ease.

How much can I borrow?
Most banks and financial institutions that lend you more than their normal lending margins require Lenders' Mortgage Insurance. The COmmonwealth Bank requires Lenders' Mortgage Insurance if we lend you more than 80% (for non Low Doc loans) or 60% (for Low Doc loans) of the value of the property. The cost of this is added to the loan. Essentially Lender's Mortgage Insurance gives you the opportunity to purchase a property with a smaller deposit. If you're eligible for the 'First Home Owner Grant', you may not require any deposit at all.

Lenders' Mortgage Insurance protects the lender (Not you, the borrower) should you default and the property is sold for less than the outstanding amount on the loan. You remain liable for any amount owing under the contract even if the mortgage insurer has paid that amount to the lender.

Even though it is the lender who is the beneficiary, it is you who pays the one off insurance charge. However, if you repay your loan within a two year period, you may be eligible for a partial refund of the lender's mortgage insurance charge.

Additional costs
In addition to the purchase price of the property, you should consider the additional costs you will incur, such as solicitor's fees and Stamp Duty. Use our Total Home Buying Costs calculator for an indication of what these may be.

 

Calculating your repayments

The amount you can comfortably commit to loan repayments will be determined by your income level relative to your financial commitments. Those commitments include your proposed home loan repayments, credit card repayments, repayments on other loans, and any additional expenses. The amount of your home loan repayments plus other commitments should not exceed 10 - 40% of your gross income, depending on your income level. To give you an idea of how much your monthly repayments would be, and how they would increase or decrease with varying interest rates, use our Home Loan calculator.

 

Pay off your home loan faster

The sooner you pay off a home loan, the better positioned you'll be financially. Here are just a few options that can help:

Viridian Line of Credit
With a Commonwealth Bank Viridian Line of Credit you can credit your entire salary into your loan. This will reduce your loan balance and reduce the amount of interest you have to pay. It also gives you access to a line of credit at home loan interest rates, which you can access at any time to pay for other expenses.

Mortgage Interest Saver Account
With a Mortgage Interest Saver Account (MISA) the balance is off-set daily against the amount you owe on your home loan.¹

Make extra payments
Make fortnightly or weekly repayments to reduce the amount you owe. If you choose fortnightly repayments, you pay half of what would otherwise be your monthly repayment each fortnight. This is equivalent to making an extra month's repayment each year.²

 

Need a break

If you have made extra repayments on your Home Loan/Investment Home Loan, and would like to take a break from meeting your regular repayments, you may be eligible to take a Repayment Holiday.³

With this option, you are able to suspend your loan repayments for a set period of time by utilising any additional repayments you have made. The preferred minimum repayment holiday period is 3 months. The maximum repayment holiday term is 12 months. During this time your special repayments balance will decrease each month by the amount of your contracted monthly repayment amount, and your loan balance will increase by the monthly interest amount.

Important information

• 1. Not available on The Economiser Home/Investment Home Loan, Viridian Line of Credit or Access Advantage. 100% offset is available on our Standard Variable, 12 Month Discounted Variable, 1 Year Guaranteed Home/Investment Home Loans. Partial Offset is available on our Fixed Rate Complete/ Investment Home Loans.
• 2. Lump sum repayments on Fixed Rate Home/Investment Home Loans can only be made to a maximum of $10,000 per annum without penalty. Payments above $10,000 per annum may incur an early repayment adjustment and administration fee.
• 3. Repayment Holidays are not available on Fixed Rate or, Interest Only Loans or Viridian Line of Credit, or where there is a second or subsequent mortgage to another financial institution ranking behind the Commonwealth Bank. Applications are subject to the Bank's approval.