Floating Interest Rate Loans

Choices Floating Rate Loan

• How a floating interest rate loan works
• A floating interest rate loan is best suited to
• Features and benefits of Westpac's Choices floating rate home loan
• Choices redraw explained
• The impact of Choices redraw on loan repayments

Choices Everyday (Revolving Credit)

• Eligibility for a Choices Everyday home loan
• How revolving credit works
• Revolving credit is best suited to
• Features and benefits of Westpac Choices Everyday

Please note: If you find any of this confusing, don't worry we can explain it all to you in plain English and in the context of your situation and your financial goals.

Choices Floating Rate Loan

A Westpac floating rate loan is flexible and can usually be repaid in full without notice and without penalty. Interest rates will move up and down in line with market movements.

How a floating interest rate loan works

The cost of borrowing will fluctuate with changes in the interest rate market.  The loan is flexible and can usually be repaid in full without notice and without penalty.

A floating interest rate loan is best suited to

• Construction loans, re-draw and line of credit facilities, and other transactional loans generally operate with a floating (variable) interest rate.
• Customers who want to repay their loan faster and keep tighter control over their finances.
• Customers who often have extra money they’d like to put towards their home loan.
• Customers who want the flexibility to be able to take a loan repayment holiday or redraw funds.

Features and benefits of Westpac's Choices floating rate home loan

• Westpac's Choices floating rate home loan is only available with Westpac's variable rate (it is not available on fixed rates or capped rates).
• No minimum redraw amount.
• The Westpac redraw fee is 40 cents for electronic transactions and 65 cents for manual transactions (including cheques and branch withdrawals).

Choices redraw explained

Any additional payments you make towards Westpac's Choices floating rate loan create a redraw amount on the loan. 

The extra repayments can be any repayments made over the minimum loan repayment amount (lump sum payments, regular additional payments, or any amount over-and-above the minimum repayment). 

The extra payments, or the redraw amount, not only decrease the interest cost on your loan, they are also available for you to redraw at a later date.

The impact of Choices redraw on loan repayments

To ensure that you retain your Westpac Choices home loan amount, a loan repayment is always calculated on the current outstanding loan balance plus any redraw amounts available. In other words, it is calculated on the original loan amount.  This ensures that additional deposits that you have made toward your loan are not eaten away by repayments that do not cover the loan (including the redraw amount).

For example, say you have a $200,000 loan and make a lump sum repayment of $100,000. This would give you a current loan balance of $100,000 plus a redraw amount of $100,000. Your loan repayments would continue at the same rate. This keeps the redraw amount of $100,000 intact for you to redraw at a later stage should you wish to.

Should you wish to have your repayments set at a level based on the new loan amount, you can request this.

Choices Everyday (Revolving Credit)

A Westpac Choices Everyday loan can save you money by using one account for your home loan and all your other banking. The money you have in Choices Everyday works for you to reduce the interest cost on your home loan, and to help you to repay your loan sooner.

Eligibility for a Choices Everyday home loan

To be eligible new customers will need;

• to have their income credited into their Westpac account, and
• to take a Westpac Credit Card.

Customers will be offered a Westpac Low Interest Mastercard with no annual fee for as long as they hold the Card account.

If you decide not to take the credit card, or not to have your salary credited to your Westpac account, you will not be eligible for Choices Everyday.

How revolving credit works

A revolving credit loan is a transactional account that is very similar to an overdraft.  Some revolving credit loans have a reducing loan limit which will amortise (reduce) in the same way a normal table loan is repaid. Other revolving credit accounts are non-reducing and therefore similar to interest only loan facilities. Interest is charged on the daily outstanding balance. 

Westpac's Choices everyday offers both reducing and static (non-reducing) limits. 

By paying your salary (and any other income) directly into your revolving credit loan you immediately lower your loan account balance and the amount of interest you pay.

If you use your credit card for your everyday purchases, you can keep your revolving credit account balance lower for longer. To maximise the benefit, you must always pay your credit card balance in full on the due date.

Revolving credit is best suited to

• Customers on a good income who often have surplus funds available.
• Customers who are good money managers.
• Customers wanting flexibility to make repayments and redraw up to their credit limit without needing to re-apply.

Features and benefits of Westpac Choices Everyday

• Minimum loan: $10,000.
• Maximum loan: no maximum
• Maximum term: 30 years (reducing limit), no set loan term for a non-reducing limit.

• Repayment frequency: fortnightly, monthly.
• Extra repayments: you can make payments anytime without penalty.
• Salary must be direct credited to Choices Everyday account.
• Choices Everyday gives you full transactional freedom - you'll get a cheque book, a plastic card and access to your money anytime you need with phone banking, Online Banking, ATMs and EFTPOS. 

• You can withdraw money up to your limit and repay your loan without restriction - just like a giant overdraft.
• You get a choice of limit type - either reducing or non-reducing.  With a reducing limit, your loan limit will reduce each month giving you a safety net that ensures that your loan is paid off within the agreed term.  A non-reducing limit lets you manage your money and make payments your way.
• Credit interest is calculated daily and paid monthly whenever you have a credit balance greater than $5000.
• It's easy to set up a temporary limit when you need a little extra cash from time to time. We can increase your Choices Everyday limit for a short period without re-documenting the loan.
• See Westpac's fees and charges.