Updated: 2 February 2021
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 to 31 March 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 be tighter than it was in March 2020
- 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 | Offer | Comments | |
|---|---|---|---|
| AFG – Retro and Link Home Loans | More details | Individual review based on circumstances, call for assistance Can include reducing payments to minimum or converting to interest only | Call 1800 629 948 |
| AFG – Alpha Home Loans | More details | Repayment break for up to 6 months Waiving fees for restructuring and consolidating | Call 1300 650 259 |
| AFG – Edge Home Loans | More details | Repayment break until 31 March 2021 | Access online via StarNet or call 1300 155 426 |
| AFG – Options HomeLoans | More details | Individual review based on circumstances, call for assistance Can include reducing payments to minimum , repayment holidays, loan variations and redraw of funds | Call 1800 356 383 |
| AMP Bank | More details | Switching to interest only payments Temporarily postponing or deferring repayments Adding overdue repayments to your balance so you are no longer in arrears Extending the loan term to reduce repayments | Call 13 30 30 |
| ANZ | More details | 0.15% reduction in standard variable home loan rate effective 27/3/2020 Repayment break up to 31 March 2021 | Call 1325 99 or Request a call back |
| Aussie Home Loans | More details | 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 Australia | More details | Repayment break for 3 months Further 3 month repayment break on review | Call132 888 |
| Bank of Queensland | More details | Repayment break for 3 months Further repayment break on review Switching to interest only for 1 year | Apply online Call 1300 557 272 |
| Bank of Sydney | More details | Repayment break for up to 6 months Switch to Interest Only Extend term | Call 139500 |
| Bank SA | More details | Reduce repayments by switching to a fixed rate loan Switch to an interest only loan for 12 months Discuss tailored assistance and hardship options | Apply for assistance here |
| Bank VIC | More details | Reduce repayments to the contractual minimum Redraw advance payments Request a repayment deferral | Call 13 63 73 |
| Bank of Melbourne | More details | Reduce repayments by switching to a fixed rate loan Switch to an interest only loan for 12 months Discuss tailored assistance and hardship options | Apply here |
| Bankwest | More details | Reduce repayments to the contractual minimum Redraw advance payments Contact Bankwest for assistance if you think you can’t resume repayments at the end of your extension period or to discuss other options | Apply online |
| Bendigo Bank | More details | Initial repayment break for up to 6 months Additional extension of up to 4 months available Resuming repayments at reduced rates Restructuring loans Switching to interest only | Call 1300 652 146 |
| Beyond Bank | More details | Initial repayment break for 3 months, followed by a further 3 months if required Additional extension up to 4 months – credit assessment applies Switch to Interest Only | More details |
| Citi | More details | Reduce your repayments to the minimum amount required Temporarily defer your repayments Access other Financial Hardship options Call or submit online form to discuss options | Call 1800 722 879 Apply online |
| CommBank | More details | Initial repayment break for 6 months and possible further repayment break for up to 4 months up to 26 March 2021 Switch to Interest Only Switch to Fixed rate | Apply online |
| Credit Union Australia | More details | Repayment break for up to 4 months Reducing repayments to minimum amount required Switching to Interest only for up to 12 months Switching to a lower fixed rate | Call 133 282 Apply online |
| Credit Union SA | More details | Call to discuss | Call 08 8202 7777 |
| ING | More details | Repayment pause Reducing repayments to the minimum amount required Switching to a lower rate fixed loan Call to discuss additional support if you are not able to resume repayments at the end of deferred payment period | Call 133 464 |
| Macquarie Bank | More details | Call to discuss options | Apply online |
| ME Bank | More details | Repayment break up to 31 March 2021 Reducing repayments to minimum amount required Switching to Interest only for up to 12 months Switching to a lower fixed rate | Apply online |
| NAB | More details | Contact NAB to discuss if you are eligible for a repayment pause or extension up to 31 March 2021 and to discuss other options | Cal 132 665 Apply online |
| Peoples Choice Credit Union | More details | Possible further extension of existing repayment pause Redraw of advance payments Reduce repayments to minimum amount required | Call 131182 |
| RAMS | More details | RAMS will be contacting people 2-3 weeks before the end of their repayment break to discuss resuming payments or additional support If you require new assistance contact RAMS to discuss financial hardship options | Apply online |
| St George | More details | Return to normal repayments at the end of an existing deferral period Return to reduced repayments at the end of an existing deferral period Call to discuss additional support if you are not able to resume repayments at the end of deferred payment period | Apply online |
| Suncorp | More details | Temporary postponement of repayments Reduction in repayments Accessing advance payments Switching to interest only | Apply online |
| TicToc Home Loans | More details | Initial repayment break for up to 6 months Additional extension of up to 4 months available Resuming repayments at reduced rates Restructuring loans Switching to interest only | Funded by Bendigo and Adelaide Bank Call 1300 650259 |
| Virgin Money | More details | Call to discuss options including deferring repayments, making interest only repayments, special arrangements regarding arrears and waiver of fees and charges related to non payment | Call 138 151 Apply for assistance |
| Westpac | More details | Contact Westpac to discuss further assistance if you are coming to the end of an existing repayment deferral period Contact Westpac to request new assistance or to discuss options such as reducing repayments to minimum amount required, switching to interest only or redrawing advance payments | 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.
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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.2
