Australian banks have recently announced that customers still suffering severe hardship as a result of the coronavirus will be offered an extension on their loan repayment pause by up to an additional 4 months.

The original loan deferral scheme was introduced in March and allowed borrowers to pause their loan payments for a 6-month period why they faced the financial impact of the coronavirus.

The banks have warned that these extensions will not be automatically applied, and those that are now able to resume their payments will need to do so once the initial deferral period expires.

More then 800,000 customers have deferred repayments during the pandemic, and concerns were raised about the deferral period expiring at the same time as federal government support measures being withdrawn (e.g. JobKeeper and JobSeeker).

Many of the 800,000 bank customers who had deferred their repayments have already begun repaying their loans following an initial three-month hiatus, with many more likely to do so at the end of their six-month deferral period.

The CEOs of the four major banks have all backed the new initiative and will work with their customers to determine the best long-term solution for each individuals’ circumstances should they still be experiencing financial hardship.

Customers with reduced incomes, will be contacted as they approach the end of their deferral period, to ensure that wherever possible they can return to repayments through a restructure or variation to their loan.

Tips for reducing the impact of a repayment pause

• Try and pay off some of your loan during the pause.
• When the pause finishes, see if you can make extra repayments to catch up.
• Negotiate a lower interest rate with your bank and if possible, try and put any savings from the rate reduction back into your mortgage.
• Call an independent financial advisor or a financial counsellor for advice.

For more information please speak to your Bank Manger or business support team who will guide you through all the options.

ANZ – Assistance for Business Owners

CBA – Assistance for Business Owners

NAB – Assistance for Business Owners

Westpac – Assistance for Business Owners