Here are some ways you could manage your home loan to help you with your new situation.

Lower your repayments
To help with the additional spending on day to day living that comes with a new baby, you may want to consider reducing your repayments for a while (and extending the term of your loan up to 30 years).  Once you’re clearer on your budget and expenses, you can look to increase your payments again (and shorten the term of your loan).

Fix your interest rate
When you have children it’s more important to know exactly what your home loan repayments will be, so you can budget with confidence.  By fixing an interest rate you’ll have the certainty of knowing your repayments will stay the same for the entire fixed rate period.

You may also want to consider splitting your loan into a number of smaller fixed interest rate loans over different periods.  For example, if your home loan is $200,000 you could split it into two $100,000 loans with fixed interest rate periods of 2 years and 5 years respectively.  That spreads your interest rate risk and gives you more certainty. 

Take a repayment holiday
When your baby arrives, applying for a repayment holiday could help ease the pressure on your finances.  A repayment holiday allows you to put your Fixed or Floating Home Loan repayments on hold for up to three months (available once every two years but not available within the first two years of drawing down your loan. Other conditions may apply).

A repayment holiday can free up some extra cash for the things you need for your new baby.  However, remember that interest will continue to accumulate on your outstanding principal during your repayment holiday which may end up costing you more in the long run.  You may however be able to increase your repayments at a later stage to make up for this.

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