Keeping your mortgage on track

If you lost your job or are on reduced hours because of COVID-19, you may have applied for financial hardship arrangements with your Bank.

A bit of time has passed and you’ll have a better understanding of your financial situation. It might be difficult, but start thinking ahead to make sure it’s still the option that will help you the most.

Check your financial hardship arrangement

The first step is to understand the arrangement you have in place. Check your paper work, emails or contact your lender for details of how your arrangement works.

Check how the short-term assistance affects the cost of your loan in the long-term. For example, it could increase the interest you pay or the length of your loan.

There’s a number of financial hardship arrangements lenders offer. These are the three most common options.

Repayment deferral

A repayment deferral means you won’t need to make repayments on your loan for a specified period – often six months. You still get charged interest. Banks have recently announced they will offer another four month extension of ‘repayment deferral’ for eligible customers.

You get a break from making repayments, but you will need to catch up on them in the future. This will mean larger repayments or making repayments over a longer period (or both).

Interest-only payments

If your current home loan repayments are ‘principal and interest’ you can make interest-only repayments for a period.

You will only pay off the interest, so your debt isn’t reducing. You’ll switch back to principal and interest repayments at the end of the interest-only period. Your repayments are likely to be higher than before.

Minimum loan repayments

If you’re paying more than the minimum repayment amount, you can ask your lender to reduce your repayments to the minimum repayment amount.

It will take longer to pay off your loan, but you’ll continue to pay it down. You can always return to making larger repayments when you can.

Review your circumstances

Consider if things have changed since you put financial hardship arrangements in place.

  • Did you seek financial hardship before you knew you were eligible for government support? For example, you may now be receiving JobKeeper payments.
  • Has the drop in your income been less than you expected?
  • Are you spending less because you’ve been working from home or in self isolation?

Review your income and expenses by downloading our comprehensive budget planner and revisit your repayment arrangements.

If you can’t make your usual repayments, pay as much as you can afford. Any repayments you make will help reduce the cost of your loan.

Talk to your lender if your situation changes

You can ask your lender about changing your financial hardship arrangements if your situation changes.

Contact your lender to understand your options. Ask questions to understand how any changes to your loan will affect your payments and how much more it may cost you in the long-term.

Remember, we are always here to help you understand your options.

Speak to a free financial counsellor

There are people you can talk to to help you with financial decisions. Call the National Debt Helpline on 1800 007 007 to speak with a financial counsellor today. They can help you put a plan in place.

About the author

Matt Carra

Matt Carra

Matt Carra is the Owner of Blue Key Finance, a Finance Broker since 2004, an SMSF Lending Specialist, a Property Investment Educator, and a Mentor to new Finance Brokers entering the finance industry. Matt is passionate about providing valuable guidance and honest advice, educating Australians on how to buy their first homes and invest successfully while protecting them with knowledge. Matt has strong long-term relationships with his panel of lenders and extensive knowledge on their credit policies, and utilises that skillset to give you peace of mind by recommending you to the right lender the first time, to negotiate a better deal, and to fight for your cause – that’s Matt’s commitment to you. Contact Matt today to start the conversation on 0425 726 538 or email

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