Keeping Up With Home Loan Repayments During COVID-19: What Are My Options in 2021?
With the announcement of lockdown potentially continuing through to September, many of us are starting to feel the full effects of the second wave of COVID-19.
After navigating through a tough 2020, the latest stay-at-home orders have once again put Australian homeowners in a challenging position as many struggle to keep up with both personal and professional financial obligations.
If you’re feeling the pressures of COVID-19 this year, you’re not alone. According to Roy Morgan’s Single Source survey, 1 in 6 mortgage holders were deemed ‘at risk’ or ‘extremely at risk’ of mortgage stress earlier this year. However, the good news is that, much like 2020, banks are offering a range of support measures to help customers through these difficult times. Below, we take a look at the main measures offered by the big four lenders: CommBank, ANZ, NAB and Westpac.
Commonwealth Bank Coronavirus Support for Home Loans:
- Home loan deferral: Commonwealth Bank is offering short-term mortgage deferrals for homeowners who have been significantly impacted by the recent lockdowns. Eligible customers can apply for a 2-month home loan deferral. During this time, no repayments are required and late fees will be waived. However, interest and other fees will continue to be added to the loan.
- Reduced repayments: For customers who are paying above their required repayments, CommBank is offering the option to reduce repayments down to the minimum monthly amount. This can be done directly in the CommBank app or through NetBank.
- Redraw facility or offset account: Eligible customers with a redraw facility or offset account can access this money and put it towards their home loan repayments. This can be done directly in the CommBank app or through NetBank.
- Switch to a fixed-rate home loan: Customers on a variable rate home loan may be eligible to switch to a fixed-rate loan, depending on a review of their financial circumstances.
- Restructure home loan debt: If other options aren’t suitable at this point in time, customers can also contact CommBank directly to restructure their home loan debt.
For more information, visit the CommBank COVID-19 banking support page or get in touch with your mortgage broker.
NAB Coronavirus Support:
- Accessing available funds: NAB customers who are ahead of their home loan repayments or paying more than the minimum amount may be able to modify their payments directly in NAB’s app. In addition, eligible borrowers can use their offset account or redraw facility to access additional funds if needed.
- Payment break: Customers who won’t be able to make a home loan repayment for a few months can speak to NAB about taking a temporary payment break. This is granted on a case by case basis and normally lasts up to three months. However, arrears and interest continue to accumulate during this time.
- Reduced payment arrangement: Those who cannot meet the minimum repayment amount can request a reduced payment arrangement for 1 to 6 months. The reduction and the length varies depending on each customer’s individual circumstances.
- Home loan restructure: Customers who have a credit card or personal loan with NAB may be eligible to restructure and consolidate their debt. Those exploring this option will need to complete a new loan application and undergo a full credit assessment.
For more information, visit the NAB home loan hardship page or get in touch with your mortgage broker.
Westpac Coronavirus Assistance
- Repayment deferrals: Eligible customers may be able to apply for a deferral on their home loan repayments, depending on their unique situation. Westpac has not stated how long the deferral periods will be.
- Repayment or interest rate reductions: Westpac may offer reduced repayment or reduced interest rate options for those customers who cannot meet the minimum repayment amount, but still want to make contributions towards paying off their mortgage. Like repayment deferrals, the length of time and the level of the reduction will depend on the customer’s individual circumstances.
- Loan term extension: Eligible customers with interest-only home loan repayments can apply to extend their loan term.
- Debt restructuring: Those with a credit card or personal loan with Westpac can apply to restructure and consolidate their debt repayments. A customer’s eligibility will be determined on a case-by-case basis following a discussion with Westpac.
For more information and to apply, visit the Westpac COVID-19 Customer Support page or get in touch with your mortgage broker.
ANZ COVID Home Loan
- Reduced repayments: Customers who have been paying more than the minimum repayment amount can apply to reduce their repayments to the minimum. This can be done on ANZ Internet Banking or by calling ANZ directly.
- Access to redraw facility: If a customer has funds in their redraw facility, ANZ will automatically use those extra funds to meet their repayment. This allows customers to keep up with their home loan without needing to contact ANZ directly.
- Access an offset account: Customers with funds in an offset account can use this money to pay off part of their home loan. However, the amount of interest that is offset against the total home loan balance will change once the funds are accessed, which could result in paying more interest over time.
- Interest-only repayments: Those unable to meet their principal and interest repayments may be eligible to switch to an interest-only repayment for a fixed period of time. For this option, ANZ requires customers to fill out an additional application and meet standard credit approval criteria.
- Refinance or consolidate debts: Customers with enough equity in their property may be able to consolidate other debts. For this option, ANZ requires customers to fill out an additional application and meet standard credit approval criteria.
For more information and to apply, visit ANZ’s COVID-19 information for homeowners page or contact your mortgage broker.
Experiencing difficulties during COVID-19? We’re here for you.
The Rateseeker team is on hand to answer any questions you may have and help you through these challenging times. Whether it’s refinancing your mortgage or understanding your options, we’re here to support you in your dream of owning your home — both now and in the future.
** General Advice Warning
The information provided on this website is general in nature only and it does not take into account your personal needs or circumstances into consideration. Before acting on any advice, you should consider whether the information is appropriate to your needs and where appropriate, seek professional advice in relation to legal, financial, taxation, mortgage or other advice.