Which banks are freezing mortgages for COVID-19?

Which banks are freezing mortgages for COVID-19?

Following the RBA’s emergency cut to the national cash rate last week, many Australian banks have announced relief packages to help manage the economic impact of the COVID-19 crisis.

As well as offering support for Australian small business, several of these banks have offered home loan customers being affected by coronavirus the chance to take a mortgage holiday. This allows these affected mortgage holders to pause their loan repayments for a limited time to help relieve pressure on household budgets.

So which banks are offering to temporarily freeze mortgage payments for affected customers? Here are all the banks that have made specific announcements so far (terms and conditions apply, contact the individual banks for details):

What is interest capitalisation?

In many cases, while you're taking a mortgage holiday, your interest charges will be capitalised, meaning they'll be added onto the outstanding balance that you owe. At the end of your repayment holiday, your lender may increase your monthly mortgage repayments or extend your loan term by the same length as your mortgage holiday to make up for the extra money you now owe. This means that while taking a mortgage holiday could relieve pressure on your budget in the short term, you could end up paying more in total interest charges over the long term. Consider contacting a financial adviser before making a decision. 

  • AMP: Offering to pause home loan repayments for three months, with the option to extend for a further three months, for clients experiencing ongoing financial challenges as a result of COVID-19.
  • ANZ: Customers can request a deferral of home loan repayments for up to six-months, with a review at three-months, with interest capitalised, meaning it is added to the customer’s outstanding loan balance to be paid over the remaining loan term.
  • Auswide Bank: Home loan, personal loan and business loan customers requiring financial assistance as a result of COVID-19 may be able to defer repayments, with interest capitalised, for up to six months. 
  • Bank Australia: Offering a deferral of scheduled home loan repayments for up to 3 months, with further 3 month extension possible following a review.
  • Bank of Melbourne: Customers who have lost their job or suffered loss of income as a result of COVID-19 can contact BoM for three months deferral on their home loan mortgage repayments with extension for a further three months available after review.
  • Bank of us: If you are experiencing financial difficulty due to COVID-19 you can apply for an up to six-month payment deferral on loan repayments, with interest capitalised. 
  • BankSA: Customers who have lost their job or suffered loss of income as a result of COVID-19 can contact BankSA for three months deferral on their home loan mortgage repayments with extension for a further three months available after review. 
  • Bankstown City Unity Bank: If you need financial assistance during this time, BCUB will be able to defer your loan repayments, with interest capitalised, for up to six months. 
  • Bankwest: To provide additional support to home loan customers who may need assistance at this time, Bankwest is offering an option to defer home loan repayments for six months. Customers will be able to apply for a deferral of home loan repayments through an online registration process, which is currently under development and will be made available as soon as possible. In the meantime, customers wanting to request a deferral of their home loan repayment can do so via secure messaging through Online Banking, or the Bankwest Mobile App, or by calling Bankwest.
  • BCU: Members who have been affected by the current COVID19 situation, are unable to repay their home loan as a result, and are in advance of their scheduled loan repayments or are able to access their offset account, can draw these funds at no cost. If no redraw or offset funds are available, all eligible members can apply for a repayment holiday on their home loan, for up to 6 months. This applies to both owner-occupied and investment loans for principal & interest or interest only repayment terms. Interest will be capitalised during the payment holiday. 
  • Bendigo and Adelaide Bank: Extending its existing COVID-19 assistance package for home loan customers, so affected customers can now apply for six months relief on loans, up from the three months previously announced on 16 March 2020.
  • Beyond Bank: Offering eligible customers the chance to defer loan repayments for up to 6 months. Interest will be capitalised to the loan amount.
  • Commonwealth Bank: All home loan and small business customers are now eligible to defer loan repayments by up to 6 months.
  • Coastline Credit Union: Offering repayment relief by way of a pause (deferral) of principal and interest repayments for selected loans for 3 months (interest will be capitalised). Where your loan is on a fixed rate, the current fixed rate period will be extended by the deferred payment period at the current fixed rate. If a fixed rate is terminated during the deferral period then break fees and applicable loan charges will be payable. Following 3 months the member’s financial position will be reviewed for possible extension of the hardship requirement for by way of a further 3 months loan repayment deferral period. 
  • Delphi Bank: Home loan and business loan customers can apply for relief on loans for up to six months.
  • G&C Mutual Bank: Recent borrowers who have no advance payments, or those who are otherwise facing financial hardship due to loss of their ordinary source of income, G&C will allow scheduled loan repayments to be deferred (with any interest capitalised and with the underlying loan term extended as required) for an initial 3 month period and with the potential for a further 3 month deferral upon a financial review by G&C. 
  • Gateway Bank: The type of assistance Gateway can offer will depend on individual circumstances, and may include deferring repayments of up to three months on loans.
  • HSBC: Offering to defer home loan, personal loan and credit card repayments by up to six months.
  • Hume Bank: Owner-occupied, investment and personal loan customers can request to have their loan repayments deferred for up to 6 months.
  • ING: To support customers who have suffered a loss of income or employment due to COVID-19, you can contact ING for a three month payment pause on your ING home or personal loan repayments. An extension for a further three months (total 6 months) may also be available on request and is subject to financial assessment. 
  • Macquarie Bank: All Macquarie Business and Personal Banking clients who are experiencing financial difficulty can immediately defer their repayments for six months.
  • ME Bank: Borrowers experiencing financial difficulty will be able to pause their home loan repayments for up to six months, with a review at three months.
  • Move Bank: Financial relief for impacted members with loans includes deferment of home loan payments up to 6 months, including a 3 month checkpoint, and deferment of all other loan payments for 3 months. The deferred interest on your loans will be capitalised. 
  • NAB: Pause home loan repayments for up to six months, including a three-month checkpoint.
  • Newcastle Permanent: Home loan and small business customers who are impacted can request a pause in their repayments for up to six months if necessary, with interest capitalised.
  • P&N Bank: If you have been affected by the current COVID-19 situation, and you are unable to repay your home loan as a result, P&N Bank members who are in advance of their scheduled loan repayments or have the ability to access their offset account can draw these funds at no cost. If no redraw or offset funds are available, all eligible members can apply for a repayment holiday on their home loan for up to 6 months. This applies to both owner-occupied and investment loans for principal & interest or interest only repayment terms; interest will be capitalised during the payment holiday. 
  • People’s Choice Credit Union: Will pause repayments for up to 6 months, with a review at 3 months, for home loans and personal loans.
  • QUDOS Bank: Will be offering vulnerable customers the ability to pause home loan repayments for up to 6 months, along with a number of other relief measures until circumstances improve.
  • Queensland Country Bank: Offering a relief package that includes deferred repayments on loans for up to six months.
  • RAMS: Customers who have lost their job or suffered loss of income as a result of COVID-19 can contact RAMS for three months deferral on their home loan mortgage repayments, with extension for a further three months available after review. Interest capitalised.
  • Service One Alliance Bank: As part of its financial assistance package, personal and business borrowers can apply for relief on loans for up to six months.
  • St.George: Customers who have lost their job or suffered loss of income as a result of COVID-19 can contact St.George for three months deferral on their home loan mortgage repayments with extension for a further three months available after review.
  • TicToc: Home loan customers can apply for relief on loans for up to six months.
  • Well Home Loans: Home loan and business loan customers can apply for relief on loans for up to six months.
  • Westpac: Customers who have lost their job or suffered loss of income as a result of COVID-19 can contact Westpac for three months deferral on their home loan mortgage repayments, with extension for a further three months available after review.

If your bank doesn’t appear on this list, don’t panic. Even if your bank has not yet announced it is offering repayment holidays for home loan customers, almost all banks offer financial hardship programs, intended to help customers experiencing difficulties manage their finances. Contact your bank, explain your situation, and work with one another to look for a suitable solution.

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Learn more about home loans

Can I take a personal loan after a home loan?

Are you struggling to pay the deposit for your dream home? A personal loan can help you pay the deposit. The question that may arise in your mind is can I take a home loan after a personal loan, or can you take a personal loan at the same time as a home loan, as it is. The answer is that, yes, provided you can meet the general eligibility criteria for both a personal loan and a home loan, your application should be approved. Those eligibility criteria may include:

  • Higher-income to show repayment capability for both the loans
  • Clear credit history with no delays in bill payments or defaults on debts
  • Zero or minimal current outstanding debt
  • Some amount of savings
  • Proven rent history will be positively perceived by the lenders

A personal loan after or during a home loan may impact serviceability, however, as the numbers can seriously add up. Every loan you avail of increases your monthly installments and the amount you use to repay the personal loan will be considered to lower the money available for the repayment of your home loan.

As to whether you can get a personal loan after your home loan, the answer is a very likely "yes", though it does come with a caveat: as long as you can show sufficient income to repay both the loans on time, you should be able to get that personal loan approved. A personal loan can also help to improve your credit score showing financial discipline and responsibility, which may benefit you with more favorable terms for your home loan.

What is an interest-only loan? How do I work out interest-only loan repayments?

An ‘interest-only’ loan is a loan where the borrower is only required to pay back the interest on the loan. Typically, banks will only let lenders do this for a fixed period of time – often five years – however some lenders will be happy to extend this.

Interest-only loans are popular with investors who aren’t keen on putting a lot of capital into their investment property. It is also a handy feature for people who need to reduce their mortgage repayments for a short period of time while they are travelling overseas, or taking time off to look after a new family member, for example.

While moving on to interest-only will make your monthly repayments cheaper, ultimately, you will end up paying your bank thousands of dollars extra in interest to make up for the time where you weren’t paying off the principal.

Who has the best home loan?

Determining who has the ‘best’ home loan really does depend on your own personal circumstances and requirements. It may be tempting to judge a loan merely on the interest rate but there can be added value in the extras on offer, such as offset and redraw facilities, that aren’t available with all low rate loans.

To determine which loan is the best for you, think about whether you would prefer the consistency of a fixed loan or the flexibility and potential benefits of a variable loan. Then determine which features will be necessary throughout the life of your loan. Thirdly, consider how much you are willing to pay in fees for the loan you want. Once you find the perfect combination of these three elements you are on your way to determining the best loan for you. 

How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

Savings over

Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

How do I calculate monthly mortgage repayments?

Work out your mortgage repayments using a home loan calculator that takes into account your deposit size, property value and interest rate. This is divided by the loan term you choose (for example, there are 360 months in a 30-year mortgage) to determine the monthly repayments over this time frame.

Over the course of your loan, your monthly repayment amount will be affected by changes to your interest rate, plus any circumstances where you opt to pay interest-only for a period of time, instead of principal and interest.

What are extra repayments?

Additional payments to your home loan above the minimum monthly instalments, which can help to reduce the loan’s term and remaining payable interest.

How do I refinance my home loan?

Refinancing your home loan can involve a bit of paperwork but if you are moving on to a lower rate, it can save you thousands of dollars in the long-run. The first step is finding another loan on the market that you think will save you money over time or offer features that your current loan does not have. Once you have selected a couple of loans you are interested in, compare them with your current loan to see if you will save money in the long term on interest rates and fees. Remember to factor in any break fees and set up fees when assessing the cost of switching.

Once you have decided on a new loan it is simply a matter of contacting your existing and future lender to get the new loan set up. Beware that some lenders will revert your loan back to a 25 or 30 year term when you refinance which may mean initial lower repayments but may cost you more in the long run.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

What is a fixed home loan?

A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

How do I apply for a home loan pre-approval from Commonwealth Bank?

To apply for a Commbank home loan pre-approval, you can either call the bank at 13 2224 or meet one of the bank’s lending specialists. You can set up a meeting online if you wish. You’ll need to do some homework before contacting the bank, such as gathering information on the kind of properties you’d like to buy and their prices.

Preparing a financial summary, which lists all your income sources as well as significant expenses, can also help determine how much you can afford to borrow. You may also want to check your credit score before applying for pre-approval.

It’s worth remembering that a CBA home loan pre-approval doesn’t guarantee that you’ll get the loan. Once you get the pre-approval, you’ll have about three to six months to decide on a property and apply for the home loan. The bank will then confirm that the property is suitable for the loan before fully approving it.

How can I calculate interest on my home loan?

You can calculate the total interest you will pay over the life of your loan by using a mortgage calculator. The calculator will estimate your repayments based on the amount you want to borrow, the interest rate, the length of your loan, whether you are an owner-occupier or an investor and whether you plan to pay ‘principal and interest’ or ‘interest-only’.

If you are buying a new home, the calculator will also help you work out how much you’ll need to pay in stamp duty and other related costs.

What are the responsibilities of a mortgage broker?

Mortgage brokers act as the go-between for borrowers looking for a home loan and the lenders offering the loan. They offer personalised advice to help borrowers choose the right home loan for their needs.

In Australia, mortgage brokers are required by law to carry an Australian Credit License (ACL) if they offer credit assistance services. Which is the legal term for guidance regarding the different kinds of credit offered by lenders, including home loan mortgages. They may not need this license if they are working for an aggregator, for instance, as a franchisee. In both these situations, they need to comply with the regulations laid down by the Australian Securities and Investments Commission (ASIC).

These regulations, which are stipulated by Australian legislation, require mortgage brokers to comply with what are called “responsible lending” and “best interest” obligations. Responsible lending obligations mean brokers have to suggest “suitable” home loans. This means loans that you can easily qualify for,  actually meet your needs, and don’t prove unnecessarily challenging for you.

Starting 1 January 2021, mortgage brokers must comply with best interest obligations in addition to responsible lending obligations. These require mortgage brokers to act in the best interest of their customers and also requires them to prioritise their customers’ interests over their own. For instance, a mortgage broker may not recommend a lender who gives them a commission if that lender’s home loan offer does not benefit that particular customer.