This is only the big 4. I am sure all institutions would have arrangements to defer mortgage repayments.
ABC NEWS
Updated
With many businesses and services forced to close under the latest Federal Government restrictions to try to curb the spread of coronavirus, many Australians are feeling the pinch when it comes to finances. Especially those with a mortgage.
At least 1 million Australians are facing unemployment as a result of the crisis.
It has many wondering what the banks are doing when it comes to home loans.
Will mortgages be put on hold?
The big four banks have all announced that their customers will be able to pause mortgage payments.
If you're with Commonwealth
- You will be able to defer home loan repayments for up to six months
- Interest will be capitalised
- Interest and charges will be added to your loan balance
- Your loan balance will be recalculated at the end of the support period
- Your loan term will be extended so repayments stay the same as they were before you started the deferral
If you're with Westpac
- You will be able to defer repayments for three months
- A three-month extension is available after review
- This option is for people who have lost their job or income as a result of coronavirus
- Deferred interest will be capitalised, so your repayments will increase for the remainder of your loan term
If you're with NAB
- You will be able to defer your repayments for up to six months
- There will be a three-month checkpoint with the bank
- You are eligible if you are a home loan customer affected by coronavirus
- This applies for owner-occupiers, investors or those on a principal and interest or interest only repayment schedule
- You won't be able to redraw during the repayment pause
If you're with ANZ
- You may be able to put your repayments on hold for six months
- Interest will be capitalised
- The bank will check in with you after three months
Your questions on coronavirus answered:
Do I need to provide some kind of proof?
Some banks explicitly state only customers affected by coronavirus will be eligible to pause their repayments.
But whether you need to provide proof (such as a doctor's note or severance form) to verify you have been affected by coronavirus depends on which bank you're with.
CBA says no evidence is required to request a deferral, although you may be asked to declare you have been impacted by coronavirus.
Westpac is currently looking at each request on a case-by-case basis rather than imposing blanket requirements.
ANZ's stance seems to be that if you have been up to date with your repayments, you will most likely be eligible.
NAB will also be treating each request on a case-by-case basis, and said staff would ask each applicant a series of questions to determine eligibility.
What's the catch?
While being able to defer payments may be your best (or only) option at the moment, there is a catch.
All of the banks have announced interest capitalisation.
That's where the interest you don't pay during your period of deferral is added to your outstanding loan balance.
For example: If you have a $400,000 home loan at an interest rate of 3 per cent, you would be paying $1,000 a month in interest.
If you pause your home loan repayments for six months, the interest amount is added to your outstanding balance.
So in six months' time, you will be looking at paying off a $406,000 loan.
ABC business reporter David Taylor put it simply in his recent analysis piece:
"That's a very complicated way of saying, "after you're done with your mortgage 'holiday', as some are calling it, you'll have to keep up your repayments, and your balance will be bigger than when you started the deferral process."
ANZ CEO Shayne Elliott told Perth radio station 6PR, the reason banks are capitalising interest comes down to Australia's banking laws.
"If we don't charge you interest, even if we defer it, your loan becomes what they call 'impaired' and that means that we have to go and allocate a whole bunch more capital to support your loan.
"If we do that, as an industry, we will not have enough capital. That wouldn't be in anybody's interest."
Stay up-to-date on the coronavirus outbreak
How do I pause my repayments?
For CBA customers, the process comes under the Hardship Request section of the website.
You will need to log into your Netbank account and answer five questions about what you need help with.
The bank will then call you within seven business days to discuss your options. Tap here to get started.
For Westpac customers, go here and tap the home loan repayment pause button and follow the instructions.
NAB customers will need to fill out this coronavirus (covid-19) support package form or call 13 22 65 for support (although you may be waiting a while if you do decide to call due to a high volume of calls).
ANZ customers will need to call the bank, but due to a high volume of requests, you may need to request it calls you back. Head to this page and scroll down to "Pause your repayments" and follow the directions.
Replies
Exactly Brissy, every intention they have is to make money from this situation. The only reason they have made adjustments is because APRA is leaning on them. But this sort of behaviour is changing (slowly).
Start looking to switch to the Neo Banks as soon as you can. Neo's like Volt, Xinja, and Up will all provide much better value for customers once they start to build their products and services, if not they are already.
ffs u2, I did say "This is only the big 4. I am sure all institutions would have arrangements to defer mortgage repayments".
I don't bank with any of the big 4.
I just want people to be aware, if they need mortgage relief, they can get it.
This is the best time to squeeze the banks for relief as they would be wanting to satisfy the community after the theft of money over the last 10 years.
They do have a lot to answer for BE.
LOL - what are you getting your knickers in a knot for El Patron? No one's criticising your post here...
oh, is that what is cutting off my circulation.
They aren't doing anything to satisfy the community.
The banks don't want to see mortgage delinquencies get out of control, and the housing market implode any more than it's going to already, because that would be extremely detrimental to them on a number of fronts. In times like this it is heavily in the banks best interests to let things slide for six months.
It's great that the banks are going to make life easier for thier customers in their time of need (for a change) but noone should be getting a warm and fuzzy feeling about it - they're only protecting themselves. The govt. are handing them billions in liquidity too - just quietly :)
LOL - Pats you sexually deviant reprobate!
REPORTED!!!
banks have had hardship allowances for ever i was forced to use this with st george in 2010 and they let you do it twicewhich lasted 12 months for me