With almost a million Australians losing their jobs due to the coronavirus, people are rightly concerned about making their ends meet. If you’re worried about your ability to make your repayments, here is some good news. Over recent weeks, Australian banks have largely committed to putting mortgage repayments on pause.
Here’s what you need to know:
Who is eligible for a mortgage repayment relief?
A mortgage freeze is available to customers whose finances have been directly impacted by the coronavirus. Typically, that would mean you have become sick, lost part or all your income, or lost your job due to COVID-19 and the associated economic downturn.
How do I defer my home loan repayments?
If you're with Commonwealth
- You will be able to defer home loan repayments for up to six months
- Interest and charges will be added to your loan balance
- Your loan balance will be recalculated at the end of the support period
- Your loan term will be extended so repayments stay the same as they were before you started the deferral
If you're with Westpac
- You will be able to defer repayments for three months
- A three-month extension is available after review
- This option is for people who have lost their job or income as a result of coronavirus
- Deferred interest will be capitalised, so your repayments will increase for the remainder of your loan term
If you're with NAB
- You will be able to defer your repayments for up to six months
- There will be a three-month checkpoint with the bank
- You are eligible if you are a home loan customer affected by coronavirus
- This applies for owner-occupiers, investors or those on a principal and interest or interest only repayment schedule
- You will still be able to redraw during the repayment pause
If you're with ANZ
- You may be able to put your repayments on hold for six months
- Interest will be capitalised
- The bank will check in with you after three months
And if you're with Bendigo Bank
- You can apply for 6 months of relief
Do I need to provide proof?
- Some banks explicitly state only customers affected by coronavirus will be eligible to pause their repayments.
- CBA says no evidence is required to request a deferral, although you may be asked to declare you have been impacted by coronavirus.
- Westpac is currently looking at each request on a case-by-case basis rather than imposing blanket requirements.
- ANZ's stance seems to be that if you have been up to date with your repayments, you will most likely be eligible.
- NAB customers wanting to defer payments will not need to provide any evidence. A pause will be applied if it's requested.
What's the catch?
- While being able to defer payments may be your best (or only) option right now, there is a catch.
- All the banks have announced interest capitalisation. While no repayments will have to be made during the ‘freeze’ period, interest will continue to accrue and added to your outstanding loan balance
Please refer to this article for more details, and instructions on how to get in touch with your bank.
We’ve also been advised by our Equipment Finance Broker, that many lenders are offering between 3- and 6-months relief on vehicle and equipment loans under their new COVID-19 Hardship Policies. If you arranged finance through us, please contact us so we can provide you with your contract number, and further details to make contact with the relevant lenders.
If you would like to discuss this in more detail with one of our accountants, please email tax@hgfin.com.au with a brief outline of your situation and your best contact number, and one of our team will be in touch.