With hundreds of thousands of Australians expected to lose their jobs over the coming months due to the coronavirus, people are perhaps rightly a little concerned about making ends meet.
The biggest regular expense for many people being their mortgage repayment. According to November 2018 ABS data, the average Australian homeowner has a $380,000 mortgage.
Those in pricier capital cities, like Sydney and Melbourne, and those who bought in recent years around the 2017 market peak would typically have higher debt again.
If you’re worried about your ability to make your repayments, however, there is some good news.
Over recent weeks, Australian banks have largely committed to putting mortgages on pause while the country grapples with the economic and health impact of COVID-19.
Here’s what you need to know.
What does a freeze on home loan repayments mean?
By freezing mortgages, a bank is effectively giving you a financial holiday of sorts. For the duration of the freeze, typically six months, you aren’t required to make any repayments to the bank. That means homeowners affected by the economic downturn can defer their normal repayments until they’re in a better position financially.
However, you should know that a freeze doesn’t equate to a free lunch. While the banks won’t expect a repayment during the freeze period, interest will still accrue throughout and be added to your mortgage total at the end.
In practice, it means your minimum repayments will actually increase slightly when you begin making repayments again so you’ll still be paying off your debt within the mortgage period.
Which Australians banks are offering a mortgage freeze?
All big four banks – ANZ, NAB, Westpac and the Commonwealth Bank – are offering six-month freezes, as is Commonwealth Bank subsidiary Bankwest.
Westpac subsidiaries St George Bank and Bank of Melbourne are both offering an initial three-month deferral.
ING is offering a three-month pause with the potential to extend to six.
Bank of Queensland and Suncorp Bank are also offering a repayment deferral although they have each committed to working on a customer to customer basis.
If you don’t see your bank or financial institution listed here, check their website for details of coronavirus relief packages.
Who is eligible for a mortgage repayment relief?
A mortgage freeze is available to customers whose finances have been directly impacted by the coronavirus. Typically that would mean you have become sick, lost part or all of your income, or lost your job due to COVID-19 and the associated economic downturn.
How do I defer my home loan repayments?
While the impact of the coronavirus is expected to be widespread, you still need to notify your bank if your circumstances change. Check your institution’s website for details and apply directly to them if you require relief.
Have you had any issues deferring your home loan repayments? Email [email protected]
Disclaimer: This article contains general information only and is not intended to be used as personal advice.
This article was originally published on Business Insider Australia.
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