Mortgage repayment holidays – what are they and should I take one?

30.03.20 | Michael Brown | News

 

Following the RBA’s emergency announcement regarding cutting the cash rate to 0.25% a number of banks have released statements regarding their response to the economic impact of the COVID-19 crisis.

Many banks have offered support for their home loan customers in the form of deferred payments – also known as a repayment holiday.

What is a repayment holiday?

A repayment holiday is a period of time over which you are not obliged to repay your mortgage. This deferral does not stop interest being added to your loan, it simply allows you to cease repayments for a period of time. Your debt will grow over the period that you do not pay, and you will either have a longer term or larger repayments to catch up, or both. It is not a period where your home loan becomes ‘free’.

It is also possible that during that period you will lose access to some of the features of your mortgage, such as a redraw facility.

Before you take a mortgage holiday

Before you take up the offer of a repayment holiday, consider your position. If you can continue to make your repayments you should do so, until you know that you will suffer hardship. You should call the bank before that day, so that you can be prepared, rather than wait until it is too late. So it may require some budgeting skills and be determined by the state of your employment.

How do I take a mortgage repayment holiday?

Before you decide to take a repayment holiday you must see whether you are eligible to do so. This eligibility will depend on a number of factors, including:

  • Your mortgage provider: different providers are offering different relief packages
  • The mortgage product you have chosen: basic variable/fixed rate loans are most likely to receive relief
  • Your financial circumstances: usually you will have to be experiencing hardship

Which banks are currently offering repayment holidays?

Below is a list of all of the banks and their response to the COVID-19 crisis. If you do not see your bank, or they are not currently offering a repayment holiday, do not panic. The best thing to do is contact your bank and discuss directly with their financial hardship team.

  • AMP: You can pause your home loan for up to 3 months with the option to extend to 6 months if you are suffering financial hardship.
  • ANZ: Customers can request a deferral of home loan repayments for up to six-months, with a review at three-months, with interest capitalised, meaning it is added to the customer’s outstanding loan balance to be paid over the remaining loan term.
  • Australian Military Bank: Are now considering this additional rapid cut to determine what they can feasibly do to further support their members while maintaining a strong stable position in these uncertain times.
  • Auswide Bank: Home loan, personal loan and business loan customers requiring financial assistance as a result of COVID-19 may be able to defer repayments, with interest capitalised, for up to six months.
    Bank Australia: Offering a deferral of scheduled home loan repayments for up to 3 months, with further 3 month extension possible following a review.
  • BankFirst: Have been active on Facebook, but have made no announcements regarding repayment holidays.
  • Bank of Melbourne: Customers who have lost their job or suffered loss of income as a result of COVID-19 can contact BoM for three months deferral on their home loan mortgage repayments with extension for a further three months available after review.
  • Bank of Queensland (BOQ): Business Banking Relief Package: As part of the Australian Banking Association’s (ABA) recently announced industry-wide small business response, BOQ has a new Business Banking Relief Package available to small business customers. This package offers small business customers a deferred repayment period of up to six months on small business loans. Personal Banking Relief Package: To help support everyday Australians also experiencing difficulty in the current environment, BOQ’s retail customers can opt to either defer their mortgage repayments or switch to Interest Only repayments for an initial period of three months. At the end of this period, BOQ will work with these customers to assess if further assistance is required.
  • Bank SA: Customers who have lost their job or suffered loss of income as a result of COVID-19 can contact BankSA for three months deferral on their home loan mortgage repayments with extension for a further three months available after review.
  • BankVic: They are offering advanced payments to cover future repayments as well as deferral for up a period of 6 months.
  • Bankwest: To provide additional support to home loan customers who may need assistance at this time, Bankwest is offering an option to defer home loan repayments for six months. Customers will be able to apply for a deferral of home loan repayments through an online registration process, which is currently under development and will be made available as soon as possible. In the meantime, customers wanting to request a deferral of their home loan repayment can do so via secure messaging through Online Banking, or the Bankwest Mobile App, or by calling Bankwest.
  • Bendigo Bank: Extending its existing COVID-19 assistance package for home loan customers, so affected customers can now apply for six months relief on loans, up from the three months previously announced on 16 March 2020.
  • CommBank: All home loan and small business customers are now eligible to defer loan repayments by up to 6 months.
  • Defence Bank: Are asking members to contact them to discuss options. They are offering a pause on home loan repayments, interest only payments, or an ability to reduce your repayment amount of access your redraw if you’re currently ahead on your repayments.
  • Delphi Bank: Home loan and business loan customers can apply for relief on loans for up to six months.
  • Gateway Bank: The type of assistance Gateway can offer will depend on individual circumstances, and may include deferring repayments of up to three months on loans.
  • G&C Mutual Bank: Recent borrowers who have no advance payments, or those who are otherwise facing financial hardship due to loss of their ordinary source of income, G&C will allow scheduled loan repayments to be deferred (with any interest capitalised and with the underlying loan term extended as required) for an initial 3 month period and with the potential for a further 3 month deferral upon a financial review by G&C.
  • Greater Bank: Business customers: reduction of 1.00%p.a. For 12 months on their current variable rate business loans; more flexibility to restructure existing lending facilities to ensure the viability of their business; the ability to request up to 6 months repayment holiday on their current business loan with interest capitalised (reviewed every 3 months).
  • Heritage Bank: Have released a COVID-19 relief package including: deferral of home loan payments up to 6 months; deferral of business banking loan repayments for up to 6 months; deferral of personal loan or credit card loan repayments for up to 3 months, plus much more.
  • HSBC: Offering to defer home loan, personal loan and credit card repayments by up to six months.
  • Hume Bank: Owner-occupied, investment and personal loan customers can request to have their loan repayments deferred for up to 6 months
  • IMB Bank: Business customers: defer payments on principal and interest loans for up to 6 months (under $5m); reduce your loan repayment by switching to interest only; waive fees on loan redraws; reduce your loan repayments to minimum levels. Consumer: defer your repayments up to 3 months; reduce your home loan repayments; waive fees, reduce your loan repayments.
  • ING: To support customers who have suffered a loss of income or employment due to COVID-19, you can contact ING for a three month payment pause on your ING home or personal loan repayments. An extension for a further three months (total 6 months) may also be available on request and is subject to financial assessment.
  • Macquarie Bank: All Macquarie Business and Personal Banking clients who are experiencing financial difficulty can immediately defer their repayments for six months
  • ME Bank: Borrowers experiencing financial difficulty will be able to pause their home loan repayments for up to six months, with a review at three months.
  • Move Bank: Financial relief for impacted members with loans includes deferment of home loan payments up to 6 months, including a 3 month checkpoint, and deferment of all other loan payments for 3 months. The deferred interest on your loans will be capitalised.
  • MyLife MyFinance: Repayment breaks of up to 6 months; early release of term deposit funds; and loan restructure.
  • National Australia Bank (NAB): Pause home loan repayments for up to six months, including a three-month checkpoint.
  • Newcastle Permanent: Home loan and small business customers who are impacted can request a pause in their repayments for up to six months if necessary, with interest capitalised.
  • P&N Bank: If you have been affected by the current COVID-19 situation, and you are unable to repay your home loan as a result, P&N Bank members who are in advance of their scheduled loan repayments or have the ability to access their offset account can draw these funds at no cost. If no redraw or offset funds are available, all eligible members can apply for a repayment holiday on their home loan for up to 6 months. This applies to both owner-occupied and investment loans for principal & interest or interest only repayment terms; interest will be capitalised during the payment holiday.
  • People’s Choice Credit Union: Will pause repayments for up to 6 months, with a review at 3 months, for home loans and personal loans.
  • Police Bank: In response to the RBA’s rate cut on 3 March, they will be reducing their Owner Occupied and Investor rates on existing loans by 0.25 bps from 1 April, putting more cash in your pocket. They’re currently reviewing the RBA’s rate cut announced 19 March and will update you shortly.
  • Qudos Bank: Will be offering vulnerable customers the ability to pause home loan repayments for up to 6 months, along with a number of other relief measures until circumstances improve.
    Queensland Country Bank: Offering a relief package that includes deferred repayments on loans for up to six months.
  • RAMS: Customers who have lost their job or suffered loss of income as a result of COVID-19 can contact RAMS for three months deferral on their home loan mortgage repayments, with extension for a further three months available after review. Interest capitalised.
  • RACQ Bank: Announced on Facebook ‘If you’re struggling to meet repayments, have lost your income or have concerns about your financial future – please send us a private message and we’ll organise for our financial hardship team to contact you.’
  • Regional Bank Australia: 0.36%p.a. Decrease on home loans, effective from 1 April 2020; 0.5% p.a decrease on commercial loans; three month term deposit over $5,000 increased to 1.6% p.a. Effective from 27 March 2020. They are also offering hardship assistance tailored to your individual circumstances – please contact them for more information.
  • Service One Alliance Bank: As part of its financial assistance package, personal and business borrowers can apply for relief on loans for up to six months.
  • St George Bank: Customers who have lost their job or suffered loss of income as a result of COVID-19 can contact St.George for three months deferral on their home loan mortgage repayments with extension for a further three months available after review.
  • Suncorp Bank: Suncorp Bank’s financial assistance package is available to eligible personal and business customers in affected communities and sectors who may need additional financial support.
  • Teachers Mutual Bank: If you have a variable rate home loan you may be able to reduce the amount of your minimum monthly repayment and retain the same loan term; If you have been paying more than your minimum monthly repayments, you may have funds available to redraw. You can use those funds to make the minimum monthly repayments; If you have funds available in your offset account, you can use those funds to make the minimum monthly repayments.
  • TicToc: Home loan customers can apply for relief on loans for up to six months.
  • Ubank: If you think you might be unable to make your Home Loan repayments please contact their Advantedge Customer Support Team.
  • Unity Bank: If you need financial assistance during this time, BCUB will be able to defer your loan repayments, with interest capitalised, for up to six months.
  • Well Home Loans: Home loan and business loan customers can apply for relief on loans for up to six months.
  • Westpac: Customers who have lost their job or suffered loss of income as a result of COVID-19 can contact Westpac for three months deferral on their home loan mortgage repayments, with extension for a further three months available after review.