COVID -19 changes: Home loans

The Coronavirus (COVID-19) pandemic is a challenging time for everyone in Australia (and the world). This is a guide about managing your home loan if you have been financially impacted by the pandemic.

This page is about steps you can take to look after yourself and your family financially during the COVID-19 pandemic

Information on this page:
Please click the links below to visit each section

Five changes you need to know about

  1. Australia’s banks have announced a support package for home loan customers financially affected by continuing COVID-19 lockdowns or those recovering from recent lockdowns. For home loan customers, this includes payment deferrals on a month-by-month basis. The support is only available on application so it’s best to call your bank to discuss your situation and access the support you need.
  2. Banks have also agreed that the credit reports of customers who deferred their home loan as part of a COVID-19 assistance offering will not be affected.  This applies where the customer recommences repayments and the loan is restructured or the arrears have been paid.
  3. Generally banks have said they will support their customers and do what they can to keep people in their homes.  Comm Bank however has introduced a freeze on forced sales for home loan customers, but there are eligibility conditions.
  4. Debt collection activity has resumed and the temporary measures that were in place to protect people from being forced into bankruptcy ended on 1 January 2021. See COVID 19 changes: Bankruptcy.
  5. The Australian Financial Complaints Authority (AFCA), which is the free dispute resolution body, has a significant event hotline 1800 337 444 for individuals financially impacted by the COVID-19 pandemic.

What do the changes mean?

It means that if you continue to be financially impacted by COVID-19 and cannot afford to return to full repayments, you should talk to your lender or creditor as soon as possible to discuss your options and ask them to consider providing you further hardship assistance. This may include reducing your repayments for a period of time, switching to an interest only loan for a period of time, restructuring your debts or other options that are suitable for your situation.

As your home loan is usually your biggest, most expensive and highest priority debt it is a good idea to adjust your budget and return to normal repayments or make the highest possible repayment you can afford.

Mortgage repayment options

If you are temporarily unable to meet your normal repayments, you have the right to ask your bank for hardship assistance. Depending on your circumstances, your lender may be able to offer options that will help to reduce your repayments for a period of time for example:

  • Extending the length of the loan so that your repayments are lower
  • Converting the loan to interest only payments for a period of time
  • Reducing your repayments to the minimum monthly repayment amount
  • Accessing money you may have available in any redraw of your loan
  • Consolidating debt for example: personal loan, credit card and home loan so that your total repayments are lower
  • A combination of these and other measures.

If you cannot afford to make any repayments, under the COVID-19 support package recently announced, banks will consider repayment deferrals but only on a month-by-month basis.

Your credit report should not be affected as long as you stick with the agreed arrangement, but check this with your bank.

If your financial hardship is not temporary and you will not be able to reasonably repay the loan, you can ask for time to sell your home. Sometimes selling your home might be the best option.  If you are in this situation, call and speak to one of our financial counsellors on 1800 007 007 to independently explore your options.

COVID-19 Home loan deferrals and credit reporting

As was the case in April 2020, the banks that are members of the Australian Banking Association, continue to ensure that customers who deferred their home loan as part of a COVID-19 assistance offering will not have missed repayments reflected on their credit report.

To check if your bank is a member of the Australian Banking Association see ABA Members.

This means that customers will have no, or blank, repayment history information entered on their credit report during the period of the deferral arrangement or enter into another form of hardship arrangement.

When the deferral ends, customers who were up to date with repayments before the deferral will exit the arrangement with up to date, or zero, repayment history information entered on their credit report. This only applies where the customer recommences repayments and the loan is restructured, or the arrears have been repaid.

If you have entered into a deferral arrangement, or another form of hardship arrangement, you should contact your bank before your arrangement ends to discuss next steps if you do not think you can restart full repayments.

Even if your lender is not a member of the Australian Banking Association, your credit report should not be affected if you enter into a formal repayment arrangement, as long as you meet the new arrangements. Check this with your lender.

When negotiating with your bank/lender

  • Contact your lenders’ hardship department.
  • Tell them how you have been affected by the pandemic.
  • Tell them if you are receiving the COVID-19 Disaster Payment, JobSeeker payment or other government support.
  • Ask them about what hardship assistance options they are offering.
  • If you have multiple forms of credit with the same lender or creditor, one option may be to restructure or consolidate these debts and switch to interest only repayments.
  • Only make a repayment arrangement you can afford. You can always make higher repayments if your circumstances improve while you are still in a repayment arrangement. It is in your interests to pay as much as you can, so you don’t fall too far behind.
  • Consider how much time you will need the repayment arrangement to be in place, for example, 3 months, 6 months, 12 months.  Usually, the longer the arrangement, the more information your lender or creditor may need from you.
  • Agree the timing of the repayments, for example, if you are paid fortnightly then you could schedule your repayments to be fortnightly as well.
  • If negotiating a hardship arrangement with your lender is taking some time, keep making repayments you can afford in the meantime.

What to ask for when you negotiate a repayment arrangement

Try to negotiate the following as part of any agreed repayment arrangement:

  • Affordable repayments
  • Late fees and default/legal fees not to be charged
  • A reduction in the interest rate
  • To deal with any arrears by extending the term of the loan (people usually do not exit financial hardship with money for higher repayments)
  • Ask that your credit report is not affected. You can do this by asking that your payment history information is marked as paid and that no default is listed while you keep to any agreed repayment arrangement (Note that your credit report should not be affected if you enter into a repayment arrangement, as long as you meet the new arrangements).
  • Ask for confirmation of any agreement in writing, particularly if it is for three months or longer.

If your lender will not agree to a repayment arrangement

If your lender is threatening legal action or is not being reasonable with your request for hardship assistance, call and speak to one of our financial counsellors immediately on 1800 007 007 for advice.
If your lender will not agree to a repayment arrangement for your home loan, you can also have that decision reviewed by the Australian Financial Complaints Authority. This is a free and independent dispute resolution service. You can contact AFCA on their significant event hotline 1800 337 444 or on 1800 931 678.

Speak to one of our financial counsellors

If you’re feeling overwhelmed and need some help to deal with your financial hardship, you can speak with one of our financial counsellors.

Financial counsellors aren’t judgmental about your circumstances – they’re here to offer you free, confidential and independent advice and assistance.

To speak to a financial counsellor you can:

  • Call the National Debt Helpline on 1800 007 007 – open Weekdays from 9:30 am to 4:30 pm.
  • Use our live chat service by clicking the chat icon in the bottom right corner of your screen. Live chat is available 9:30am-4:30pm weekdays. If you send a message outside these hours a financial counsellor will get back to you.

Make an appointment to see a financial counsellor in your local area – Find a local Financial Counsellor .

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