COVID-19, Money

COVID-19: Help with mortgage repayments

Published on March 27, 2020 1:43 am, by

Key points

  • In March 2020 most lenders offered borrowers a break from repayments of at least 3 months and up to 6 months. This initial offer was due to finish around September 2020
  • Most lenders have now agreed to offer assistance for another 4 months, through into 2021. Lenders have said this new round of assistance will only be available to borrowers that actually need it and where they believe borrowers can ultimately repay the loan – so expect the criteria to tighter than it was in March
  • Reducing repayments to minimum contractual repayments, accessing redraw amounts or extra payments you’ve made in the past may also help or you may be able to switch to Interest Only payments
  • For lots of people these options will be a massive help – but they probably aren’t “free”. You will probably end up paying extra interest on your loan. We have a Mortgage Relief Calculator to help you make an informed decision
  • Interest rates have generally fallen so make sure you aren’t paying more interest than you need to – ask your lender for a rate reduction

Additional assistance options available for mortgage holders

For a lot of people, mortgage repayments is a major expense and if you’ve lost you job, been stood down or your income has reduced significantly it’s going to be tough making your normal repayments. The good news is there is help available. Most lenders also have well established policies covering financial hardship and they’ve added new options to deal with the impact of COVID-19.

The main thing you need to keep in mind is repayment breaks probably aren’t “free”. Lenders are being helpful, but they aren’t giving customers free money. If you need to reduce your payments or take a break from payments then you should absolutely do it – but the repayments you don’t make and the interest you don’t pay will be added to your loan and you will probably pay it later – check the details with your lender. But that should be when things are a bit more normal than they are at the moment. We now have a calculator that will help you estimate the cost of taking a repayment break or switching to interest only repayments so you can make an informed decision about what you do. You can access the Mortgage Relief Calculator here. It is only designed for people currently making Principal & Interest Repayments.

If you are under financial pressure but you can still make repayments

If you are still working or earning an income and you can still afford to make some repayments then you should. Consider options such as:

  • Negotiate with your lender to make sure you are on the best interest rate they can give you – rates have fallen a long way and many people are in mortgage products that haven’t caught up with the rates on offer to new customers. A lower interest rate will make the repayments lower
  • Reducing your repayments to the minimum amount -especially helpful if you have been making more than the required repayments
  • Switch to Interest Only payments for the time being

The advantage of continuing to make repayments is that in the long term you will end up paying less interest.

If you have lost your job, been stood down or cannot afford to make repayments

If you cannot make your repayments you have a number of options available:

  • Negotiate with your lender to make sure you are on the best interest rate they can give you – rates have fallen a long way and many people are in mortgage products that haven’t caught up with the rates on offer to new customers. A lower interest rate will reduce the impact of any reduction in repayments
  • Use any redraw amount that have available – this will be especially helpful if you’ve been making additional repayments
  • Ask your lender for a break from repayments

Taking a break from repayments

Most lenders are now providing the option to take a break from repayments for a period of time to help get people through the worst of the COVID-19 pandemic. Different lenders have slightly different approaches but generally the repayments you don’t make and the interest you don’t pay will be added to your loan so at the end of your repayment break, your mortgage balance will be higher and either your ongoing repayments will be higher or your loan term will be extended.

In most cases even if you elect to take a break from repayments you can actually make repayments – so if things are better than you expected you can use some of you extra cash to make repayments.

We’ve developed a Mortgage Relief Calculator that will help you estimate the cost of pausing your repayments for 3 months or 6 months or switching to interest only payments for a period. You can access our Mortgage Relief Calculator here. It is only designed for people currently making Principal & Interest Repayments.

Options by lender

Lender OfferComments
AFG - Retro and Link Home LoansMore detailsCall to discuss optionsCall 1800 629 948
AFG - Alpha Home LoansMore detailsRepayment break for up to 6 monthsCall 1300 650 259
AFG - Edge Home LoansMore detailsRepayment break for up to 6 monthsAccess online via StarNet or call 1300 155 426
AFG - Options HomeLoansMore detailsCall to discussCall 1800 356 383
AMP BankMore detailsRepayment break for up to 3 monthsCall 13 30 30
ANZMore details0.15% reduction in standard variable home loan rate effective 27/3/2020
Repayment break for 6 months
Check in after 3 months
Call 1325 99 or
Request a call back
Aussie Home LoansMore detailsRepayment break for up to 6 months
Lowering repayments to the minimum contractual repayment
Utilising available redraw
Switching to a fixed rate
Aussie Select - call 131333
Aussie Activate - call 1800184260
Aussie Elevate - call 1300650259
Bank AustraliaMore detailsRepayment break for 3 months
Further 3 month repayment break on review
Call132 888
Bank of QueenslandMore detailsRepayment break for 3 months
Further repayment break on review
Apply online
Call 1300 557 272
Bank of SydneyMore detailsRepayment break for up to 6 months
Switch to Interest Only
Extend term
Call 139500
Bank SAMore detailsRepayment break for 3 months
Further 3 month repayment break on review
Apply for assistance here
Bank VICMore detailsRepayment break for up to 6 monthsCall 13 63 73
Bank of MelbourneMore detailsRepayment break for 3 months
Further 3 month repayment break on review
Apply here
BankwestMore detailsRepayment break for up to 6 monthsApply online
Bendigo BankMore detailsRepayment break for up to 6 monthsCall 1300 652 146
Beyond BankMore detailsRepayment break for up to 6 months
Switch to Interest Only
More details
CitiMore detailsCall or submit online form to discuss optionsCall 1800 722 879
Apply online
CommBankMore detailsRepayment break for 6 months
Switch to Interest Only
reduction in interest rates
Automatic reduction to min repayment for repayments by Direct Debit
Apply online
Credit Union AustraliaMore detailsReduction in interest rates
Repayment break for 6 months
Call 133 282
Apply online
Credit Union SAMore detailsCall to discussCall 08 8202 7777
INGMore detailsRepayment break for 3 months
option to extend for a further 3 months on review
Call 133 464
Macquarie BankMore detailsInterest rate reductions
Repayment break for 6 months
Apply online
ME BankMore detailsRepayment break for up to 6 months
Check in after 3months
Apply online
NABMore detailsRepayment break for 6 monthsCal 132 665
Apply online
Peoples Choice Credit UnionMore detailsInterest rate reductions
Repayment break for up to 6 months
Check in after 3 months
Call 131182
RAMSMore detailsRepayment break for 3 months
Option to extend for a further 3 months on review
Apply online
St GeorgeMore detailsRepayment break for 3 months
option to extend for a further 3 months
Apply online
SuncorpMore detailsTemporary postponement of repaymentsApply online
TicToc Home LoansMore detailsRepayment break for 6 monthsFunded by Bendigo and Adelaide Bank
Call 1300 650259
Virgin MoneyMore detailsCall to discuss options Call 138 151
Apply for assistance
WestpacMore detailsRepayment break for 3 months
option to extend for a further 3 months
Apply online

If you are concerned about the financial impact of COVID-19 or you are facing the uncertainty of losing your job or having your income significantly reduced we can help. Sign up to MoneyBrilliant and we will give you access to a host of tools and features to help you organise your finances and make better decisions about your money. We’ll also give you tailored insights about the financial assistance available from governments and businesses to help you face the economic and financial challenges caused by the COVID-19 pandemic.

You can register for MoneyBrilliant online at www.moneybrilliant.com.au or download our app from the App Store or the Play Store.

 

This summary has been prepared by MoneyBrilliant Pty Ltd (AFSL 492711, ACL 493068). The information in this summary is of a factual nature only. We are not suggesting or recommending that you take any particular course of action in relation to any financial product or service. It does not take into account your personal circumstances or objectives. If you need financial advice or taxation advice you should seek advice from a licensed financial adviser or tax agent. You may also be able to access additional information from the websites of the Australian Securities and Investment Commission (ASIC) and the relevant product providers.

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Peter is the CEO of MoneyBrilliant. He has over 20 years experience in banking, insurance and accounting. Peter has three sons, ranging in age from 16 to 3, is a sport and fitness fanatic and a volunteer firefighter. He is passionate about improving people's lives through making financial services more accessible.

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