IN A NUT SHELL
Rather than the extra funds you put on your loan go into redraw, and your repayments stay the same. The additional funds you place on your loan come off the principal amount at the end of every month therefore making your repayments lower every month. You can still have a 100% outset account as well. This is definitely for planners or people with a strategy. Make a plan, aim high, stick to it. It can be measured and you can change anytime from dynamic payments to a normal loan; by just filling in a form.
This loan has a great low variable interest rate, This is a great loan especially for people who have a loan repayment target. Here are some examples
A young couple currently both working and want to start a family.
You agree that when your loan repayments are $1,600 per month or lower you will begin your family as you can afford to life on the one income.
A person working in a job, just for the money.
Their real passion is elsewhere. They have started their dream business/ passion part time, as they still need their full time job to cover their living expenses. They know if they get their mortgage down to a specified amount they can then do their dream business/passion full time.
Make a plan, aim high, stick to it…do your dream business/passion full time!
How do Dynamic Repayments Work
Dynamic Repayments is a feature that allows for the amortisation of a loan on a monthly basis, based on the loan balance at the time. If activated on your loan, any additional payments made will be used to reduce the regular Principal & Interest repayment amount, as opposed to reducing the amount of time to pay off the loan. Regardless of the frequency, the recalculation of the repayments will occur once a month on the Interest charge date.