The Commonwealth Bank has today launched protection for owner-occupied homeowners by paying their loan repayments for up to a year if they, their spouse or dependent passes away or is diagnosed with a terminal illness.
The Home Loan Compassionate Care is available for new and existing owner-occupied home loan customers aged between 18-59. The protection is only available for customers with a standard variable rate home loan, fixed rate home loan, or an Extra home loan, and a $120,000 cap applies.
The initiative comes as new research from the big four bank reveals a third of Australians would only be able to make their home loan repayments for up to six months if they, their spouse or dependent were to die or be diagnosed with a terminal illness.
One in 10 homeowners said they would only be able to cover their mortgage repayments for one month or less.
Angus Sullivan, Group Executive Retail Banking Services said the initiative is an Australian first.
"We know that mortgage repayments are the single biggest financial commitment for Australian homeowners, so when the unthinkable happens, we'll support our customers by making their home loan repayments for around 12 months at no cost," he said.
"We're proud that together with AIA we have been able to deliver this Australian-first for new home loan customers and will be making it available to our existing customers at no cost to thank them for their loyalty."
Thinking about refinancing to a low-rate, variable owner-occupier home loan? Below are a handful of low-rate loans in the market.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) owner-occupied home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
The research also revealed that over half of Australian homeowners haven't had a conversation with their spouse or dependents about how they would continue covering their home loan repayments if they passed away or were diagnosed with a terminal illness.
While nearly half of respondents said they manage the monthly mortgage payments, a third are not completely across the details of their home loan. Women (40%) were more in the dark than men (29%).
Mr Sullivan said the bank has made it as easy as possible to access the protection.
"If something were to happen, the last thing you should have to worry about is your home loan. In designing this protection, we've made sure there's no need to sign up or to activate it.
"We've also consulted with our own employees who have gone through similar, difficult experiences to ensure the end-to-end claims process is as easy and stress-free as possible, and a dedicated team has undergone specialised training to handle these sensitive matters."
The research also found that almost half (45%) of respondents said they would need financial assistance to cover their mortgage repayments. That number increased to 55% for those with children under the age of 18, and was highest for those under the age of 30 (67%).
Of those who said they would require financial help, two fifths said they would ask family or friends for support.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
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.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*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.
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