Time-Out - 5.99%
5.99% Fixed repayment rate for 2 years
Cut your mortgage by up to half. If you're good at managing your money and/or your property investments, the Time-Out™ Home Loan could be a very powerful financial tool for you.
Over time, you will face extra demands on your cashflow, and with interest rates and living expenses increasing, you may need a break. With a 5.99% 2 Year Fixed Rate, you have the extra flexibility you need.
Maybe you're starting a family and one of you will be taking time off from work, or you have older children heading for private school or university, or you want to take a year off to study, or something similar.
Taking a Time-Out™ could be right for you.
You can cut your mortgage by up to half for a full 2 years. And you can even roll in any personal loans and credit cards at the low Time-Out™ rate as well. It's the cashflow management loan that puts you in control.
CASE STUDY 1 - First time property investors
Bill and Mary have a house valued at $600,000 with $100,000 remaining on their home loan and they have seen an investment property they'd like to buy and rent out. They would prefer to wait until they have paid more off their current home loan, but they're also worried that if they delay buying an investment property the market might move against them and it might be much more expensive to buy later.
By keeping the repayments so low on the investment property for the first 2 years, Bill and Mary will be able to focus on paying more off their owner/occupied home loan, reducing it to a level that they believe they'll be able to handle comfortably at the end of the 2 year period.
CASE STUDY 2 - Planning for a period of reduced income?
Mark and Jill have both worked full time for a number of years and have built up substantial equity in their home. Now they are expecting their first child. Jill wants to take 12 months maternity leave to care for the baby, but they're worried about their mortgage payments when they drop down to a single income.
Their mortgage consultant recommended New-Loan's Time-Out™ Home Loan. They can cut their mortgage payments almost in half for 2 years by utilising some of the equity in their property to capitalise a portion of their loan interest.
This allows Mark and Jill to plan for the maternity leave. Jill can be with the baby for the time she wants and they can get ready for the increased standard variable rate repayments when she returns to work.
CASE STUDY 3 - How to close the investment property rental gap
Danny and Jo purchased an investment property 3 years ago, which is now worth over $500,000. They still owe $400,000, with loan repayments of $2,990 per month.
After expenses, they receive $1,800 per month in rental income. The shortfall of $1,190 a month is affecting their lifestyle, but they do not want to sell the investment property just yet.
By refinancing their $400,000 investment loan into a New-Loan Time-Out™, they can reduce their monthly repayments to $1,996. Their monthly shortfall is now just $196 per month.
At the end of the 2 year Time-Out™ period, the loan can continue as a standard interest only loan. Their loan repayments (based on the higher loan balance of $422,000) would now revert to $2,813 per month. At that point, Danny and Jo can decide whether they want to continue with their investment property or perhaps sell it.
So, how does it work?
The Time-OutTM is a new kind of mortgage. So, here's how it works. The monthly loan repayments over the first 2 years are interest only and based on a repayment rate which is 2.45% lower than the standard variable rate. The monthly interest charge is calculated at the standard variable rate. (Currently 5.99% p.a. repayment rate, 8.44% p.a. standard variable rate and comparison rate of 8.44% p.a.).
The difference between the actual repayments made and the interest owed under the standard variable rate, being unpaid interest of 2.45%, is capitalised (added) to your outstanding loan amount each month.
The standard variable rate is still the basis of calculating your monthly interest charge each month and is based on your outstanding loan amount.
At the end of the initial two year period, your repayments revert to principal and interest based upon the higher loan balance at that time (due to the capitalisation of the unpaid interest each month).
*Example only, rates are subject to change
Frequently Asked Questions
Q. Is this a cheap honeymoon loan?
A. No. The interest rate used is 8.44%. Your repayments commence at 5.99% and the period is for 24 months
Q.Where does the gap between 8.44% and 5.99% go - the 2.45%?
A. This interest payable is added to the size of your loan (termed capitalisation)
Q. If the RBA Cash Rate goes up, what happens?
A. The interest rate goes up in line with the RBA Cash Rate, your repayments would increase but the capitalisation gap rate remains constant
Q. My loans keep getting bigger? How will I know what it is at any time?
A. You will receive statements every month informing you of your loan balance
Q. If I want to stop paying the low rate, what happens and what does it cost?
A. You can elect to stop the Time-OutTM period at any time and revert back to the Std Variable rate. There is no cost to do so. If you wish to change to another product or go to another lender, there are deferred establishment fees payable during the first 4 years
Q. Sounds great, how can I apply for a Time-OutTM ?
A. Apply online or call us now.
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