What's the difference between a fixed and variable rate home loan?
A fixed rate home loan means your loan's fixed interest rate will stay the same for the fixed rate period. For example, during a 3 year fixed rate home loan, the interest rate will stay the same for 3 years. This means your repayments won’t change during that period.
A variable rate home loan means your loan's variable interest rate could move up or down during the loan term. This means your minimum repayments could change too.
What’s the difference between a ‘principal and interest loan’ and an ‘interest only’ loan?
A principal and interest loan means that when you make your home loan repayments, the repayment is paying off the interest charged for that week/fortnight/month and part of the principal (the amount that you borrowed).
With an interest only loan, the repayment only pays off the interest charges. The principal is then paid off in full at the end of the loan period or gradually paid off when you switch the loan to ‘principal and interest’.
What’s the difference between a line of credit and a standard home loan?
A line of credit is similar to an overdraft facility in that you have access to a pre-approved credit limit (e.g. $150,000), which you can access at anytime through a transaction account. You can use as much or as little as you like and only pay interest on what you’ve used. There is no regular repayment schedule and no principal repayments are required unless the credit limit is reached or cancelled.
With a standard home loan, interest is charged on the principal (the amount you still have owing) and a regular repayment schedule is required.
NAB 100% Offset is an optional feature of the NAB Tailored Home Loan - Variable Rate that allows you to pay off your home loan sooner while keeping your savings separate. The money that you have in your transaction/deposit account is used to ‘offset’ your loan.
For example, if you had a NAB Tailored Home Loan (Variable Rate) of $100,000 and $10,000 in your "linked" deposit account, you would only be charged interest on $90,000 of your loan amount. By having your salary as well as your savings deposited directly into your "linked" deposit account you could save even more.
NAB 100% Offset may also be a tax effective arrangement because you do not earn any interest on the amount in your "linked" deposit account which would normally have been treated as income and subject to taxation at your normal marginal rate.
If you are ahead in your contracted home loan repayments, you can apply for a home loan repayment holiday. Your home loan repayment holiday can be from 2-12 months.
To find out if you're eligible to take a break from making your contracted home loan repayments please contact your personal banker or call 13 22 65 from 8am-7pm Mon-Fri, or 9am-6pm on weekends (AEST/AEDT) .
Yes. If you're far enough ahead of your scheduled repayments, you can redraw the extra funds if eligible. Redraw is available with all NAB variable rate home loans (excluding building loans and Defence Home Owners Loan). For fixed rate home loans, redraw is only available at the end of the fixed rate period (i.e. when the rate becomes variable). The minimum redraw amount is $2,000.
To redraw funds you can contact your banker or call 13 13 12 from 8am-8pm Mon-Fri, or 9am-6pm on weekends (AEST/AEDT) . Or if you have a redraw facility established for your home loan then you can also use NAB Telephone or Internet Banking to redraw funds.
How does a NAB FlexiPlus Mortgage or NAB Portfolio Facility differ from a normal overdraft?
A NAB FlexiPlus Mortgage or NAB Portfolio Facility is an all-in-one wealth management facility, which incorporates a line of credit, along with other features a normal overdraft doesn't provide. The line of credit portion of the facility operates much like an overdraft, but your credit limit is higher (up to 90% of the market value of your property) and the interest rate is lower than most overdrafts and personal loans. You access the money through a transaction account and there are no NAB transaction fees.
Can NAB home loans be used if I’m building my home?
Yes. Several NAB loans have a special ‘building conditions’ feature specifically suited for building or renovating. The feature allows for your loan to be progressively accessed (drawn down) as the building progresses. This is a great way to save money as you only pay interest on the funds as you use them. This feature is available on NAB Tailored Home Loan – Variable Rate (Interest Only) with Interest only terms of 1 or 2 years and NAB Defence Force Home Loans.
NAB FlexiPlus Mortgage and NAB Portfolio Facility are also great ways to manage building or renovating as they give you a credit limit (approved loan limit), which is accessed through a transaction account. The money is available as and when you need it, and you can use as much or as little as you want, and only pay interest on what you use.
Can I split my loan into 2 products, for example a fixed and variable rate loan?
Yes. To get the right balance of certainty and flexibility you can choose to split your borrowings between one or more products. You can take out 2 different loans for the same property with just 1 application fee.