CommBank allows interest-only home loan switches without credit check

author-avatar By
on June 01, 2020
CommBank allows interest-only home loan switches without credit check

Source: CBA

Australia's biggest bank has offered another lifeline to customers experiencing financial hardship due to COVID-19.

Commonwealth Bank (CBA) announced it would be allowing customers to apply for a one-year interest-only (IO) extension, or switch if they are currently making principal and interest repayments, without requiring a serviceability assessment.

From 29 May, customers will be eligible for the IO switch/extension when:

  • They are not in arrears;
  • They are not in financial hardship;
  • There will be a minimum of 1 year remaining on the contracted loan term at the expiry of the proposed interest-only term

Borrowers who have deferred their home loan repayments for six months are eligible for the switch if they are no longer in financial hardship and have contacted CBA to cancel their deferral. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner-occupiers.

Lender

Variable
More details
UNLIMITED REDRAWS
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWS

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
REFINANCE ONLY
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
REFINANCE ONLY

Variable Rate Home Loan – Refinance Only

  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
  • Low rate home loan with added benefits, add offset for 0.10%
  • Save thousands & make an environmentally conscious choice on your loan for homes less than 12 months old
  • Get a 7.0 star NatHERS rating or higher for up to 1.59% discount on your variable rate home loan T&Cs apply

Green Home Loan (Principal and Interest)

  • Low rate home loan with added benefits, add offset for 0.10%
  • Save thousands & make an environmentally conscious choice on your loan for homes less than 12 months old
  • Get a 7.0 star NatHERS rating or higher for up to 1.59% discount on your variable rate home loan T&Cs apply

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 7, 2022. View disclaimer.

CBA Group Executive Angus Sullivan said the move was made to further support customers through the economic fallout from the pandemic. 

"We recognise that as the coronavirus situation evolves and customers start returning to work, they may require alternative temporary assistance measures to help them get back on their feet sooner," Mr Sullivan said. 

"As part of this we are temporarily allowing existing home loan customers to apply for a one-year interest-only extension or switch if they are currently making principal and interest repayments without requiring a serviceability assessment.

"Eligible customers will be able to easily apply for an extension or switch digitally via NetBank.

"Customers can also speak to their Broker, visiting us in branch or by calling our Australian-based call centres." 

Mr Sullivan added that any customers financially impacted by COVID-19 could contact CBA to see what support options were available to them.

CBA isn't the first lender to announce interest-only extensions for struggling customers: Westpac last week announced it would do the same.

Westpac General Manager, Home Loans Will Ranken said eligible home loan customers could switch from principal and interest repayments to interest-only, or extend their current interest-only home loan term for a further 12 months without a serviceability assessment. 

"We recognise that many customers who have been financially impacted by COVID-19 still want the option of making some repayments during this time," Mr Ranken said.

“These changes mean it is now simpler for customers to apply to extend their interest-only loan term, or switch their repayments to interest only."

CBA support measures 

Interest-only switches are just one of several support measures CBA has announced as part of its pandemic response. 

At the start of May, the bank controversially started moving customers' home loan repayments to the minimum, which it said would release an average of $400 a month for customers. 

But the move was criticised for lengthening the life of borrowers' loans, costing them tens of thousands in additional interest costs. 

CBA said it had repayment deferral requests on approximately 144,000 home loans with balances totalling $50 billion, 71,000 business loans with balances totalling over $15 billion, and 25,000 personal loans. 

The bank also said it had approved more than 6,500 loan applications under the Government's small and medium-sized enterprise Guarantee Scheme, totalling over $500 million of new lending. 




Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Alex joined Savings.com.au as a finance journalist in 2019. He enjoys covering in-depth economical releases and breaking down how they might affect the everyday punter. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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