If you are putting your Mortgage repayments on pause, make sure you have read the fine print
Updated 22 March 2020
What happens if I can’t pay my mortgage?
The answer from the big four banks is that you are ok and you will be able to keep your home. However, borrowers must be informed of the fine print attached to any holds on loans.
The economic impact of the Covid-19 pandemic is changing daily, and the lending institutions appear to be willing to help customers out, for now. And whilst the banks quickly announced their reprieve of loan repayments to small businesses last week, they were not so swift with expanding that generosity to households.
However, each of the big four (ANZ, CBA, NAB and Westpac) have now released statements concerning temporary holds on mortgage repayments affirming that any customers who have lost their job or suffered loss of income as a result of COVID-19, may be eligible for deferred home loan repayments of up to six months, with a three month review.
However, customers must be aware of the terms attached. Despite some news outlets announcing the ‘repayment holiday’; this is no such thing. Any pause in repayments will end up being capitalised onto the rest of the loan term.
This simply means, once the pause is lifted, you will again be making repayments but with a bigger balance than when you began the deferral process. So whilst this gives you comfort in knowing you will not lose your house, please be aware that this may only be pushing your financial strain into the not so distant future.
However, deferring payments is not the only option. Talk to your broker and discuss all available possibilities. Different circumstances call for different responses, and your broker is the best person to discuss your individual position. Remember, your broker works for you, not the bank.
To our valued Amalis clients, please know we are working tirelessly to stay up to date with changing requirements and guidelines and we make it our business to analyse the fine print. For the wider community, please stay well and implement safety plans.
May we all work through this together.