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.

How do I apply for a home improvement loan?

When you want to renovate your home, you may need to take out a loan to cover the costs. You could apply for a home improvement loan, which is a personal loan that you use to cover the costs of your home renovations. There is no difference between applying for this type of home improvement loan and applying for a standard personal loan. It would be best to check and compare the features, fees and details of the loan before applying. 

Besides taking out a home improvement loan, you could also:

  1. Use the equity in your house: Equity is the difference between your property’s value and the amount you still owe on your home loan. You may be able to access this equity by refinancing your home loan and then using it to finance your home improvement.  Speak with your lender or a mortgage broker about accessing your equity.
  2. Utilise the redraw facility of your home loan: Check whether the existing home loan has a redraw facility. A redraw facility allows you to access additional funds you’ve repaid into your home loan. Some lenders offer this on variable rate home loans but not on fixed. If this option is available to you, contact your lender to discuss how to access it.
  3. Apply for a construction loan: A construction loan is typically used when constructing a new property but can also be used as a home renovation loan. You may find that a construction loan is a suitable option as it enables you to draw funds as your renovation project progresses. You can compare construction home loans online or speak to a mortgage broker about taking out such a loan.
  4. Look into government grants: Check whether there are any government grants offered when you need the funds and whether you qualify. Initiatives like the HomeBuilder Grant were offered by the Federal Government for a limited period until April 2021. They could help fund your renovations either in full or just partially.  

How do you qualify for a CBA home loan with casual employment?

Qualifying for a home loan without a full-time job may be challenging, but it can be done. The first step is to understand how a CBA home loan is assessed when you have casual employment.

Most lenders will assess your expenses and savings while checking your loan eligibility, checking on factors crucial to home loan approval, such as if your bills are paid on time and what your credit score presently looks like. 

Your income can be one of the most critical factors to determine your final approved home loan amount. As such, you’ll need to provide payslip copies to lenders to assist them in assessing your income during the loan tenure, regardless of your employment status, full-time, part-time, or otherwise.

Casual employees will want to be casually employed for at least 12 months to be eligible for a home loan. Alternatively, you want to have worked as a permanent casual worker (working for a fixed number of hours per week) for at least one month, or you should have been in your current job for a minimum of three months (if the hours are irregular) to be eligible for the 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. 

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

What do people do with a Macquarie Bank reverse?

There are a number of ways people use a Macquarie Bank reverse mortgage. Below are some reasons borrowers tend to release their home’s equity via a reverse mortgage:

  • To top up superannuation or pension income to pay for monthly bills;
  • To consolidate and repay high-interest debt like credit cards or personal loans;
  • To fund renovations, repairs or upgrades to their home
  • To help your children or grandkids through financial difficulties. 

While there are no limitations on how you can use a Macquarie reverse mortgage loan, a reverse mortgage is not right for all borrowers. Reverse mortgages compound the interest, which means you end up paying interest on your interest. They can also affect your entitlement to things like the pension It’s important to think carefully, read up and speak with your family before you apply for a reverse mortgage.

Cash or mortgage – which is more suitable to buy an investment property?

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.

A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

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.

How do you determine which home loan rates/products I’m shown?

When you check your home loan rate, you’ll supply some basic information about your current loan, including the amount owing on your mortgage and your current interest rate.

We’ll compare this information to the home loan options in the RateCity database and show you which home loan products you may be eligible to apply for.

 

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.

How can I apply for a first home buyers loan with Commonwealth Bank?

Getting a home loan requires planning and research. If you are considering a home loan with the Commonwealth Bank, you can find the information you need in the buying your first home section of the bank’s website.

You can see the steps you should take before applying for the loan and use the calculators to work out how much you can borrow, what your monthly repayments would be and the upfront costs you’d likely pay.

You can also book a time with a Commonwealth first home loan specialist by calling 13 2221.

CommBank publishes a property report that may help you understand the real estate market. The bank has also created a CommBank Property App that you can use to search for property.  The link to download this app is available on the same webpage.

If you are eligible for the First Home Loan Deposit Scheme, CommBank will help you process your application. The scheme helps first home buyers to purchase a home with a low deposit. You can read details about this scheme here and speak with a CommBank home lending specialist to understand your options.

How do I apply for Westpac’s first home buyer loan?

If you’re a first home buyer looking to apply for a home loan with Westpac, they offer an online home loan application. They suggest the application can be completed in about 20 minutes. Based on the information you provide, Westpac will advise you the amount you can borrow and the costs associated with any possible home loan. 

You can use Westpac’s online mortgage calculators to estimate your borrowing power. You can also work out the time it might take to save up for the deposit, and the size of your home loan repayments

When applying for a home loan with Westpac, you’re assigned a home finance manager who can address your concerns and provide information. The manager will also offer guidance on any government grants you may be eligible for. 

Can first home buyers apply for an ING home loan?

First home buyers can apply for an ING home loan, but first, they need to select the most suitable home loan product and calculate the initial deposit on their home loan. 

First-time buyers can also use ING’s online tool to estimate the amount they can borrow. ING offers home loan applicants a free property report to look up property value estimates. 

First home loan applicants struggling to understand the terms used may consider looking up ING’s first home buyer guide. Once the home buyer is ready to apply for the loan, they can complete an online application or call ING at 1800 100 258 during regular business hours.