The best financial advice in uncertain times is that you must manage your cash flow to your best interest, and should reach out to your bank to see if you have any flexibility on your loan repayments.
Many banks and lenders have in the past week come out with payment deferral policies and procedures to help in these COVID-19 times.
As announced by the Australian Government recently, there is some reprieve on your home loan repayment, but do note it is only getting deferred – lenders will continue to charge and accrue interest on your home loan. Basically, that means your home loan amount will continue to grow while repayments are on pause, as any unpaid interest will be added to your outstanding loan balance.
When you talk to your banks, you can explore other options about how to reduce your home loan repayments each month such as applying for interest-only repayments, negotiating a lower rate, etc.
Check with your bank for follow-up queries, or visit its website for the full statement on its support package details but here’s a gist of the announcements made.
Home loan customers at CBA are now eligible to defer loan repayments by up to six months. A digital registration process is available for those wishing to defer their repayments. This can be done through your Net Banking portal.
Westpac’s home loan customers who have lost their job or suffered loss of income as a result of COVID-19 are eligible for a three-month deferral on their home loan mortgage repayments, with extension for a further three months available after review. The bank has also announced a special fixed rate of 2.29% over 1, 2 or 3 years fixed for owner-occupied home loans, with principal and interest repayments.
In addition to home loan customers, other support measures have also been announced for business customers including lower rates, payment deferral arrangements and wavering of fees
Home loan customers experiencing financial challenges will be able to pause their repayments for up to six months, with NAB checking in after three months.
For a customer with a typical home loan of $400,000, this will mean access to an additional $11,006 over six months, or $1,834 per month, NAB says.
For its clients experiencing financial difficulty due to COVID-19, ANZ is able to support by putting home loan repayments on hold for six months, with interest capitalised. If you pause your repayments, ANZ will check in with you after three months.
Macquarie has extended small-business loan repayment relief to all business and personal banking customers, which would include commercial loan, overdraft, home loan, car loan and credit card clients. Further, in response to initiatives announced by the federal government and the Reserve Bank of Australia (RBA), Macquarie has repriced its product suite to reflect the lower cost of funding.
Bendigo and Adelaide Bank
In addition to providing business customers with the option to freeze their loan repayments for up to six months, Bendigo will extend its hardship arrangements to all customers affected by the virus.
The arrangements include:
- waiving fees for the restructuring or consolidation of loans;
- waiving interest rate reductions for early withdrawals on term deposits prior to maturity;
- waiving or deferring of fees and charges; and/or
- deferring of interest payments or term extensions.
For personal customers, Suncorp’s relief measures include:
- deferring loan repayments on a case-by-case basis for customers affected by the virus
- dropping fixed rate home loans to 2.29 per cent on two-year fixed and 2.49 per cent on three-year fixed rates
- offering 1.70 per cent term deposit rates between six to 12 months.
For business customers, Suncorp will:
- reduce the interest rate for existing Business Essentials variable loans to a maximum rate of 3.69 per cent for residentially secured lending and a maximum rate of 3.99 per cent for commercially secured lending
- remove all business account transaction and online international transfer fees on business deposit accounts from 3 April 2020
- lower the Small Business Overdraft and Small Business Line of Credit interest rates by 30 bps
- reduce the Business Essential base variable rate for new lending to small businesses by 30 bps and reducing fixed rates by 30 bps for commercially secured lending
For all other lenders please check their website for more details, as Australian Prudential Regulation Authority (APRA) has recently advised they must report and publicly disclose the nature and terms of any repayment deferrals.
If you’re having trouble finding the details, google: [your lender’s name] + home loan deferral coronavirus.
Failing that, check out their website’s ‘Newsroom’ or ‘Media’ page for recent announcements.
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