Are you worried about meeting your home loan repayments?

One of the devastating impacts of COVID-19 is that many Australians are struggling financially. We want you to know that we are here to help you.

Here you will find the answers to some commonly asked questions.

There are a number of options available that may help ease the financial burden on Australians impacted by COVID-19. Most lenders and insurers have announced home loan relief packages since the pandemic unfolded.

Your home loan repayment is usually a household’s largest commitment. If you are concerned with your ability to meet your home loan obligations due to sudden change such as reduction or loss of income, you may be able to ask your lender for assistance during this time.

What options are available?

  • 1
    Repayment holiday

    A repayment holiday can pause your principal and interest repayments for a period of time. Repayment holiday policies vary lender to lender, Eg. Some lenders may grant a repayment holiday for three months, with an option to review and extend to six months.

    After the repayment holiday the lender may either increase the amount of your repayments so that your loan term is not extended or extend your loan term by the length of the Repayment Holiday. It’s important to act early if you experience any difficulty. It is important to note that during this time your loan will still attract interest.

  • 2
    Payment variation

    This could help reduce your monthly payments by extending the loan term. This may assist if you are experiencing a temporary reduction in income but still wish to make payments towards your mortgage.

    If the lender agrees to extend the term and reduce your payments for the balance of the loan it will take you longer to repay your loan which may result in additional interest being paid.

Home loan redraw facility or offset account

If you have been making extra repayments to your home loan and have an 'available' balance, you may be able to suspend your payments temporarily using the funds in your redraw facility. This is subject to each lender’s policy and criteria so it’s best to check with your Broker or your lender to find out if this option is available to you.

What other options are available to me?

Some lenders are providing borrowers with other options, such as the ability to switch from principal and interest repayments to interest only repayments (however this still requires the Broker and Lender to perform an assessment to ensure that the change will not cause you further hardship). We have also seen lenders giving borrowers the opportunity to restructure their home loan from variable to fixed interest rates, without incurring the fees associated with restructuring or consolidating loans.

You might be asking yourself - will a repayment holiday appear on my credit history?
This is a very good question and Mortgage Choice along with industry bodies are working with lenders and credit reporting agencies to advocate for consistency in lenders’ approaches. Currently it depends on your lender. This is an evolving situation with some lenders recently announcing that home loan repayment holidays would not impact borrowers’ credit history. We will continue to update this page as more information comes to light.


You should approach a home loan repayment holiday as a last resort. Avoid asking your lender for a home loan repayment holiday as a precaution, it’s important that you only ask for it if you actually need it. Whilst repayment holidays will give you some immediate relief, you need to understand that this may result in higher minimum repayments once the repayment holiday finishes or more interest paid over the life of the loan.

Once the repayment holiday is over, your loan balance will be larger than if you had made repayments over the period because you haven’t paid the principal or the interest in the holiday period. It doesn’t eliminate the need to make repayments, you are simply deferring your repayments. You will still be required to pay your loan back within your loan term and some lenders will extend the loan term by the period of the repayment holiday.

Please note that the above is meant to be a generic guide only of the types of options which are available in the market. We have not considered your circumstances in providing this guidance and prior to making any decisions it is important to speak to either your lender or a Mortgage Choice Broker.

Note: Information is accurate as at 2 April 2020

To find out if you are eligible for a home loan repayment holiday, contact your local broker today.

Check out our videos below

What is a repayment holiday?

Is a repayment holiday right for me?

What are my relief options?

Posted in: Home loans