The banks have launched their own list of deferral policies for you in the event that you may need to act on them. Do you need a break? The financial impact on COVID-19 may impact your income and job, it is important to know that there are options to pause your mortgage repayments, then we’ve broken down the banks’ deferral policies for you.
Late last week the Australian Banking Association (ABA) announced that small businesses affected by the coronavirus would have their loan repayments deferred for six months.
But when it came to home loan customers, there was no similar, wide-sweeping announcement from the ABA, it may just be a matter of time.
Rest assured though that all the big four banks are allowing customers who have been impacted by the coronavirus to hit pause on their mortgages for up to six months.
Many of the smaller lenders are also allowing deferral relief measures too, including the likes of Adelaide Bank and Macquarie.
Below are deferral policies each of the Aussie major banks and their offers to customers. These aren’t the only hardship options available to you, so if you’d like to find out more, please get in touch.
Commonwealth Bank
All CBA home loan customers are now eligible to defer loan repayments by up to six months. A digital registration process is available for any home loan customer wishing to defer their repayments.
Here’s CBA’s statement and support package details.
Westpac
“Westpac customers who have lost their job or suffered loss of income as a result of COVID-19 should contact us for three months deferral on their home loan mortgage repayments, with extension for a further three months available after review,” the bank said in a statement.
Here’s Wespac’s statement and support package details.
ANZ
If you’re experiencing financial difficulty due to COVID-19, ANZ may be able to support you by putting your home loan repayments on hold for six months, with interest capitalised (below is an explanation of what this could mean for you). If you choose pause your loan repayments, ANZ will check in with you after three months.
Here’s ANZ’s statement and support package details.
NAB
Home loan customers experiencing financial challenges will be able to pause their repayments for up to six months, with NAB checking in after three months.
Here’s NAB’s statement and support package details.
Other Financial Institutions
The great news is that APRA has advised that all financial details must be publicly disclosed, this includes the terms of their deferals. For all other lenders please check their website for more details, as APRA has recently advised they must report and publicly disclose the nature and terms of any repayment deferrals.
If you’re having trouble finding the details, google the name of your lender [lender’s name] + loan deferral coronavirus.
Explaining the terms to help with confusion.
- Repayment pause or deferral
A pause or deferral of repayments is often known as a mortgage repayment holiday. It means you take a temporary break from your normal repayments while you get back on your feet financially. You will need to cover these repayments later, either by extending your loan for a longer period (thus making more repayments) or by increasing your repayments after the pause period. - Interest capitalisation
Some lenders will pause your repayments but charge interest for those months of non-payment. Instead of making you repay all this interest in one go it is usually capitalised onto your loan. This means the extra costs are added to your existing loan amount and you repay them over time.
Possible Action
There are other options you can explore to reduce your home loan repayments each month besides hitting the pause button, so please feel free to get in touch with us if you’d like to explore options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. Before taking any action, consider your own particular circumstances and seek professional advice. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances.