Westpac to make it easier to pay off home loans if you're struggling

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on May 20, 2021
Westpac to make it easier to pay off home loans if you're struggling

Westpac have launched a new 'savings buffer' initiative to help mortgage customers who are experiencing financial hardship.

The new policy will grant home loan customers entering hardship arrangements the option to build a savings buffer, and is set to be rolled out in the coming months. 

Westpac will work with customers to create a savings buffer of at least $100 a month when calculating hardship payments. 

Interest will continue to accrue on the home loan, and Westpac's hardship team will work with each individual customer to determine the amount they can free up within their budget to put into their buffer. 

The big four bank said the initiative would mean customers could make smaller repayments to their mortgage, giving them the breathing space to save for unexpected expenses. 

The measure is seen as a short-term strategy, used in conjunction with existing hardship support measures like payment deferrals, interest rate reductions, loan-term extensions, and referrals to financial counsellors.


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

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • 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 REDRAWSSPECIAL OFFER

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
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
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
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

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 May 29, 2022. View disclaimer.


Westpac Director of Customer Vulnerability and Financial Resilience Catherine Fitzpatrick said the savings buffer was designed to help customers in severe financial stress keep their head above water. 

“While most customers have resumed mortgage repayments following deferrals at the start of the COVID-19 pandemic, there are around 4,500 accounts where individuals and families require more tailored and flexible support to get back on their feet,” Ms Fitzpatrick said. 

“After meeting their monthly expenses, we have found some customers have no income left to prepare for life events like medical emergencies, fixing a household appliance or a car breakdown." 

Research from Westpac found one in two Australians have had to pay for unexpected bills in the past 12 months, like auto repairs (24%), home repairs (20%), medical bills (20%), and pet emergencies (11%). 

Two in five said they would feel unprepared financially to cover these emergency expenses

Ms Fitzpatrick said Westpac hoped the policy would help customers to steer clear off high interest loans and payday loans to help pay off their mortgage. 

“We will take a customer’s financial history into consideration and look to the future to work through multiple options to help get them back on track," she said. 

“We encourage customers who are in financial difficulty to call us as soon as possible so we can consider what options may work for their personal situation." 

"A really sensible initiative" 

Westpac's new policy is supported by Financial Counselling Australia (FCA), who have been advocating for lenders to help customers in financial strife to have some money left over for other expenses. 

FCA chief executive Fiona Guthrie said the savings buffer was in the best interest of most customers as well as Westpac, and hoped other lenders would follow suit. 

“When creditors expect every single cent of a person’s uncommitted income to go toward repaying debt, all they are doing is setting people up to fail," Ms Guthrie said.

"Life always happens. Financial counsellors know that in reality we should expect unexpected expenses.

“Providing for a savings buffer will mean peace of mind for Westpac customers doing it tough."

Good Shepherd CEO Stella Avromopoulos also welcomed the initiative, noting how hard COVID had been for vulnerable families. 

“At Good Shepherd, we have witnessed first-hand how COVID-19 has created a newly vulnerable cohort of Australians, as well as exacerbating the hardship faced by those already experiencing financial insecurity," Ms Avromopolous said.

“It is critical that we continue to develop and invest in safe, fair and affordable lending options to alleviate some of the pressure on those experiencing adversity, without burdening them with long-term debt that is difficult to repay.”


Photo by Scancode Productions on Unsplash

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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