CBA extends maximum interest-only loan period

CBA recently announced the extension of its interest-only loan period from 10 to 15 years.

Speaking to Broker Daily, CBA’s executive general manager, home buying, Dr Michael Baumann, said this move is in the name of consumer needs.

“Recently, we announced our plans to extend the maximum interest only period for investment home loans from 10 years to 15 years, with customers able to request an Interest Only period of up to five years at a time,” said Baumann.

“At Commonwealth Bank we’re constantly looking for ways to meet our customers’ evolving home buying needs and deliver products, policies and services that will help them deliver against their goals.”

Customers can extend loans nearing the 10-year mark by an additional five years depending if they meet eligibility and risk criteria.

These will be approached on a case-by-case basis, said CBA, including a borrower’s ability to service the loan and the requested interest-only periods.

This move makes CBA the first among the majors to offer 15 years on interest-only loans. For investment loans, Westpac and NAB offer 10-year maximums on these loans, while ANZ and Macquarie offer five years.

Alex Whitlock, Momentum Media director, praised CBA for the move, labelling it a win for investors.

“This is really good news to see a major bank make such a positive policy change for property investors,” he said.

“Interest only loans can be a liability in some instances for owner occupiers but for investors, they’re the backbone of building wealth through investing in property. It gives property investment real scope and it maximises investments by maximising cash flow capabilities.”

Making things even more attractive to investors is no need to refinance on these loans. When the limit was 10 years, brokers and consumers would need to go through the internal or external refinance process in order to secure another 5 year interest only period.

Now with the extension, brokers and their customers can go through the same process as they did when they extended after the first five years.

Whitlock hopes other banks take notice of the change and enact similar policies.

“I really commend CBA on this move. I hope other lenders take away how important this tool is for investors, particularly when they purchase properties that have good capital,” he said.

This announcement was broken early through an inside scoop, mentioned in a recent episode of Broker Daily Uncut. To listen to this episode, click here.

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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