Need to pause your mortgage repayments? Here are the banks’ deferral policies

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This is one article we hope you never have to read. But if COVID-19 has impacted your income to the point where you may need to pause your mortgage repayments, then we’ve broken down the banks’ deferral policies for you.

Late last week the Australian Banking Association (ABA) announced that small businesses affected by the coronavirus would have their loan repayments deferred for six months.

But when it came to home loan customers, there was no similar, wide-sweeping announcement from the ABA.

Rest assured though that all the big four banks are allowing customers who have been impacted by the coronavirus to hit pause on their mortgages for up to six months.

Many of the smaller lenders are also allowing deferral relief measures too, including Macquarie and Bank of Queensland, for example.

Below we’ve outlined the deferral policies each of the major banks are offering customers. It’s important to note, however, that these aren’t the only hardship options available to you, so if you’d like to find out more, please get in touch.

Commonwealth Bank

All CBA home loan customers are now eligible to defer loan repayments by up to six months. A digital registration process is available for any home loan customer wishing to defer their repayments.

Here’s a full statement on the support CBA is providing for personal customers.

Westpac

“Westpac customers who have lost their job or suffered loss of income as a result of COVID-19 should contact us for three months deferral on their home loan mortgage repayments, with extension for a further three months available after review,” the bank said in a statement.

Here’s the statement and support package details in full.

NAB

Home loan customers experiencing financial challenges will be able to pause their repayments for up to six months, with NAB checking in after three months.

For a customer with a typical home loan of $400,000, this will mean access to an additional $11,006 over six months, or $1,834 per month, NAB says.

Check out their statement for more details on their support package.

ANZ

If you’re experiencing financial difficulty due to COVID-19, ANZ may be able to support you by putting your home loan repayments on hold for six months, with interest capitalised (see below).

If you pause your repayments, ANZ will check in with you after three months.

ANZ have also released a statement detailing their full customer support package.

Other lenders

For all other lenders please check their website for more details, as APRA has recently advised they must report and publicly disclose the nature and terms of any repayment deferrals.

If you’re having trouble finding the details, google: [your lender’s name] + home loan deferral coronavirus.

Failing that, check out their website’s ‘Newsroom’ or ‘Media’ page for recent announcements.

An important final note

It’s important to note the above policies only state that they’ll defer your repayments – it’s likely they won’t stop interest from accruing on your home loan.

For example, as ANZ notes in their statement, home loans with repayments paused will have their “interest capitalised”.

Basically, that means your home loan amount will continue to grow while repayments are on pause, as any unpaid interest will be added to your outstanding loan balance.

With that in mind it’s worth noting there are other options you can explore to reduce your home loan repayments each month besides hitting the pause button, so please feel free to get in touch with us if you’d like to explore those avenues.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Loan repayments deferred six months for small businesses affected by COVID-19

If your small business is being affected by the coronavirus your loan repayments will be deferred for six months, says the Australian Banking Association (ABA).

ABA CEO Anna Bligh today announced a small business relief package from Australia’s banks.

“Small businesses can rest assured that if they need help, they will get it,” Ms Bligh said.

The assistance package will apply to more than $100 billion worth of existing small business loans and, depending on customer take-up, could put as much as $8 billion back into the pockets of small businesses.

“This is a multi-billion dollar lifeline for small businesses when they need it most, to help keep the doors open and keep people in jobs,” Ms Bligh said.

Ms Bligh added that banks were putting in place a fast track approval process.

“Banks are already reaching out to their customers to offer assistance and packages will start rolling out in full on Monday [23 March],” she said.

Government to invest up to $15 billion in support of SME lending

The ABA loan deferral announcement came one day after the federal government announced a $15 billion commitment to enabling smaller lenders to continue supporting Australian consumers and small businesses.

The government said it hoped that the investment would enable customers of smaller lenders to continue to access affordable credit as the world deals with the significant challenges presented by the spread of coronavirus.

The government announcement came shortly after the RBA cut the cash rate to a record low of 0.25% following an emergency meeting due to coronavirus.

But wait, there’s more.

Earlier in the week the federal government announced a range of measures to stimulate SME spending via tax incentives and other initiatives.

One measure included changes to instant asset write-off provisions – the threshold was increased from $30,000 to $150,000 (ex GST) and write-off provisions were opened up to businesses with an annual turnover of up to $500 million (the previous cut-off was $50 million) until June 30 2020.

Get in touch

It’s fair to say there has been a lot of news to get your head around this week.

And while it can seem overwhelming during these uncertain times, rest assured that we’re keeping on top of the announcements that matter to you.

So if you’d like to explore any of the changes outlined above – including the six-month loan repayment deferral – please get in touch. We’re here to help you any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

RBA cuts cash rate to record low 0.25% amid COVID-19 outbreak

The Reserve Bank of Australia (RBA) has cut the cash rate to a record low of 0.25% following an emergency meeting due to the impact the coronavirus is having on the economy.

RBA Governor Philip Lowe said in a statement the move was due to the virus causing “major disruptions to economic activity across the world”.

“This is likely to remain the case for some time yet as efforts continue to contain the virus,” said Governor Lowe.

Governor Lowe added the cash rate cut would help support jobs, incomes and businesses so that when the health crisis recedes, the country will be well placed to recover.

“The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3% target band,” said Governor Lowe.

Hasn’t the RBA already cut the cash rate this month?

That’s right. And ordinarily, the RBA board only meets on the first Tuesday of every month. But as we’re all well aware, these aren’t ordinary times so an emergency RBA Board meeting was called.

The RBA last held its regular meeting on March 3 and cut rates to 0.5% because it believed the coronavirus outbreak was going to hit the economy hard.

However, over the past fortnight, global financial markets have been in freefall as countries all around world reel from the economic fallout of the COVID-19 pandemic.

Want to know what this rate cut means for your home loan?

It’s worth noting that lenders don’t automatically reduce your monthly repayments when they drop interest rates.

With this being the second RBA cash rate cut this month – and the fifth since June 2019 – if you need some extra financial breathing space each month due to the coronavirus outbreak then please get in touch.

We’re ready to work through your options with you, whether that be asking your lender to drop your monthly repayments, discussing budgeting tools, refinancing, or seeking hardship arrangements.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Homeowners impacted by COVID-19 encouraged to contact lender

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Homeowners who have had their income impacted by the coronavirus outbreak are being encouraged to seek out hardship options with their lender.

The economic impact of the coronavirus outbreak is evolving daily, if not hourly, across the Australian financial landscape.

Businesses have closed, jobs have been lost, and casual workers have had their hours slashed from work rosters.

If you’re one of the many Australians who have been affected – or are worried that you soon will be – rest assured that you can talk to your lender about hardship options without it affecting your credit report.

Here’s a statement released by Commonwealth Bank CEO Matt Comyn, for example:

“We encourage our retail customers who may be facing hardship due to impacts of the virus to contact us so that we can provide them with assistance, for example hardship options including deferral of loan repayments.”

What are some other options?

If you don’t believe you need to seek financial hardship, but you’d still like a bit of extra breathing room, it may be worth considering refinancing or renegotiating your home loan.

There have been four rate cuts in the past year – including one last month that reduced the RBA’s official cash rate to a record low of 0.5%.

And here’s the thing: lenders don’t automatically drop your repayments when the interest rate falls.

So if you haven’t asked your lender to reduce your home loan rate over the past year – or even the past month – then you may be able to reduce your monthly repayments by refinancing.

Get in touch

We understand that these are tough and uncertain times, yet rest assured we’re here for you no matter what lies ahead.

If you’d like us to help you explore either your hardship or refinancing options then please get in touch – we’re ready to assist you any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

The coronavirus economic stimulus plan for SMEs explained

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Small businesses all around the world are facing uncertain times. However, rather than shutting up shop until COVID-19 passes, the federal government is hoping to stimulate SME spending through a raft of initiatives and tax incentives.

Indeed, the government estimates its two new business investment initiatives have the capacity to support more than 99% of businesses across Australia (3.5 million SMEs).

Basically, it’s hoping these measures will encourage SME owners to “stick with investments they had planned, and encourage them to bring investment forward to support economic growth over the short term”.

Let’s take a look at what they involve.

Instant asset write-off threshold increase

The instant asset write-off threshold has been increased from $30,000 to $150,000 (ex GST) and can now be accessed by businesses with an annual turnover of up to $500 million (up from $50 million) until June 30 2020.

Assets that may be able to be immediately written off include a concrete tank for a builder, a tractor for a farming business, or a truck for a delivery business, for example.

Now, it’s important to keep in mind that “write-off” doesn’t mean “free asset”.

Basically, this initiative allows you to immediately claim all the tax deductions you would have claimed over the life of the asset.

This can help with your business’s cash flow, as getting this cash back sooner means you can re-inject it straight back into other parts of your business.

Accelerated depreciation deduction

The other big initiative in the federal government’s plan to support SMEs is accelerated depreciation.

Basically, businesses will be able to immediately deduct 50% of the asset cost in the year of purchase and then also depreciate the remaining 50% over the asset’s useful life, so long as the business has a turnover of less than $500 million.

This initiative will provide businesses with a 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.

Sound a little confusing? The good news is that the Business.gov.au website has two great case studies that explain exactly how this initiative works in more detail.

Get in touch today

If you’d like to find out more about the instant asset write-off or the accelerated depreciation deduction, and how they might work with an asset purchase for your business, get in touch today. We’d love to help out any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.