Coronavirus (COVID-19) Lending Policy Changes, Updates, & News

We will continue to support our customers during the COVID-19 pandemic with the latest updates, changes in lending policies and lender news.

How can we help you?

Our mortgage brokers are working from home and are available to assist in any way possible during this crisis.

Some of the ways that we can help as your mortgage brokers are:

• Refinancing to a lower interest rate or interest only repayments.
• Releasing equity to give you cashflow if your income may be affected.
• Debt consolidation to make repayments manageable.
• Advice regarding your mortgage or buying a new property.

FAQs - COVID-19

I’ve lost my job, or lost hours as a result of COVID-19, what type of financial hardship reliefs are banks offering?

In light of the crisis, banks are giving customers the option to temporarily stop their home loan repayments for up to 6 months (repayment pause).

Different lenders have different assistance options. These may include, waiving fees on early term deposit withdrawals, interest rate freezes on loans, options to defer or restructure home loan repayments, and emergency credit card limit increases.

Some of the different financial hardship relief options offered are:

• Deferring scheduled loan repayments, also known as a repayment holiday.
• Offering interest-only repayments.
• Waiving fees and charges.
• Adding overdue repayments to the balance of your loan, so you are no longer in arrears and being charged late fees.
• Extending the loan term to reduce the amount of repayments.

Not all banks and lenders will have a coronavirus specific relief package prepared. However, they still have standard policies in place to help those who are facing financial hardship for any reason.

Customers coming to the end of their mortgage deferral period in September have several options which includes extending the deferral, resuming repayments, switching to interest only and other options.

We weigh the pros and cons of each option on our page, ‘After The Mortgage Payment Deferral Ends’.

I’m a small business owner and I’ve lost a massive chunk of my income, what types of assistance are banks offering?

Australian banks will defer loan repayments for six months for small businesses who need assistance because of COVID-19.

Banks are also offering loans, including overdrafts, with no repayments for the first six months, at very low interest rates, supported by the Government, through an SME Loan guarantee.

Some banks and lenders have announced that small business customers who need help to manage their cash flow can defer principal and interest payments up to six months for:

• Business term loans (excluding credit cards, overdrafts, cashflow/invoice/trade finance, commercial bills),
• Business auto loans,
• Equipment finance facilities,
• And equipment loans.

While doing so, please note that:

• Interest deferred will be capitalised and fees will continue to be debited to the account;
• Any current fixed rate period will also be extended by 6 months at that fixed term rate; and
• Your loan term may be extended by at least 6 months so that your repayments do not increase because of the deferral.

In addition, some lenders are also offering:

• Unsecured three-year term loan up to $250,000 for eligible new and existing customers with turnover of less than $50M, as part of the Federal Government’s latest economic support measures that guarantees 50 per cent of new loans issued by eligible lenders to small and medium size businesses.
• Interest rate reduction on unsecured lending term loan for new and existing customers.
• Interest rate reduction on overdrafts for new and existing customers.
• Interest rate reduction for small business cash-based loans.
• Merchant terminal rental fee refunds for three months.
• Helping small and medium businesses take advantage of the increased instant asset write-off and accelerated depreciation provisions in the Federal Government stimulus package with no establishment fees for equipment finance loans until the end of June 2020.

If I get a repayment holiday (repayment pause), will I be charged interest during this time?

Yes, when you take a repayment holiday (repayment pause), while you won’t have to make any principal or interest payments for the 6 months, interest will continue to accrue which is added to your home loan balance. This is also known as interest capitalisation.

It can then be paid off over the life of the loan once repayments begin again, or the length of the loan extended. This will be a conversation between you and your bank to determine your preference.

For example, if you were to stop making your repayments for six months, with a mortgage balance of $400,000 at 4% p.a (30 year loan term).

At the end of the deferment period of 6 months, your new home loan balance will be $408,066.96 including $8,066.96 in accrued interest.

I have funds in my redraw, can I still get a repayment holiday?

Yes, you can. However, please note that banks will work with the customers on an individual basis. As it’s not always in your best interest since the interest is capitalised.

The repayment pause option should be your last option.

If you have funds in redraw, you will need to withdraw these funds first. Otherwise, your redraw balance will decrease as regular repayments will be taken from your redraw balance.

Should I wait for the banks to contact me if I’m struggling with my repayments?

No, you should contact your lender as soon as possible, if you’re having trouble with your repayments.

The earlier you can contact your lender, the more assistance they will be able to provide.

Who do I contact and how if I’m in need of financial relief from my lender?

There are many ways you can contact your bank or lender.

• Ideally, you should do it online either via their website or their smart phone app.
• Alternatively, you can call their hotline (call centres) as they’re open and working overtime. However, due to the high number of calls, you may have to request a call back.
• Bank branches continue to remain open, however due to the Government’s social distancing measures, it’s best to use digital banking if at all possible.

Can I refinance my home loan after the repayment holiday?

Many customers will get jobs again late this year and will want to refinance to clean up debts / get back on their feet. Lenders haven’t yet confirmed their policy, but generally, we expect:

• Major lenders will want at least 3 to 6 months of perfect repayments on your home loan to consider your application. Some lenders only want a 3-month history, but this is just a few, and likely they will change this policy to avoid getting inundated.
• Specialist lenders will consider your home loan refinance application at a higher rate as long as you’re able to make repayments now (if still not making repayments then not okay).

The key to approval will be applying with the right lender based on your individual circumstances.

Which banks are putting mortgages on hold?

The Big Four banks have already announced that customers affected by the Coronavirus (COVID-19) will be able to temporarily put their mortgage repayments on hold.

Commonwealth Bank (CBA)

For borrowers with a home loan with CBA, customers can:

• Defer mortgage repayments (stop making their repayments) for a period of six months.
• The interest will be capitalised (added) on top of your home loan balance.

How to pause your mortgage repayments? You’ll need to fill out CBA’s Defer Repayments Request Form here.

Westpac

For borrowers with Westpac:

• Defer for a period of three months, with an additional three months available after a review.
• This applies to both owner-occupiers and investors on a principal and interest repayment as well as interest-only.
• Interest is capitalised.

How to pause your mortgage repayments with Westpac?

You’ll need to fill out Westpac’s Apply for assistance form here.

ANZ

For borrowers with ANZ:

• Defer repayments for up to 6 months with a three month check in period.
• Available for customers affected by the coronavirus crisis.
• Interest will be capitalised.

How to pause your mortgage repayments with ANZ?

You’ll need to fill out an online registration form with ANZ here. Once submitted, a representative from ANZ will get in contact with you to discuss your request.

NAB

For borrowers with NAB:

• Defer repayments for up to 6 months with a three month check in period.
• Interest will be capitalised.

To apply, you’ll need to fill out their Coronavirus Contact Form here.

Many other banks and lenders have since announced that they’ll also be allowing their home loan customers a pause in their mortgage repayments for 3 to 6 months.

Even lenders who don’t have this facility will have financial hardship arrangements in place, so it’s recommended that you get in touch with your mortgage or bank directly to go over your options.

What is interest capitalisation?

Interest capitalisation refers to when any interest on a loan that is accrued is added on to the loan balance.

Since you may be able to put your mortgage repayments on pause for up to six months, the interest continues to accrue during this period which is added to your home loan balance.

How much will your loan balance be after six months, if you put your mortgage repayment on hold?

Let’s look at an example:

If you did not put your mortgage on hold for 6 months, then the interest over the term is $287,477 and the total repayment is $687,477 ($400,000 + $287,477).

With a repayment holiday, the interest with holiday is $301,341 and the total repayment is $701,341.

The interest accural during the holiday period is $8,066 and there is an additional interest of $5,798 so the total cost of the repayment pause is $13,864.

Do I need to provide any type of proof to my bank?

Some banks have stated that only customers affected by the Coronavirus will be eligible to put their mortgages on hold.

It depends on your bank’s policy:

• ANZ: No evidence is required, if you’ve been up to date with your repayments till now.
• CBA: No evidence is required with CBA for a repayment pause (deferral).
• NAB: No evidence is required and a repayment pause is granted if requested.
• Westpac: Westpac is considering each request on a case by case basis. Please contact them to confirm if you’re eligible.

If you’re lender requires proof, a doctor’s note or a severance form may suffice as proof.

Do you need assistance?

Our mortgage brokers are working from home and are available to help in anyway possible during this pandemic.

Please call us on 1300 889 743 or fill in our free assessment form; or directly email your mortgage broker.