Updates On Mortgage Holidays

We have created this post to provide you the latest information and updates on mortgage holidays announced by the Government.


They have said “the package will include a six month principal and interest payment holiday for mortgage holders” but people are asking for detail on how this will look, what this will cost them and when they will be able to get this information so they can decide if it is something that they should do.

As mortgage advisers we are waiting for detail too as we need this so we can answer questions and ensure that we provide the correct advice.

We have already posted a couple of blogs that provide some extra information;

  1. How Mortgage Holidays Work
  2. Managing  Your Home Loan Through Covid-19

The finance minister has also clarified today on Newstalk ZB that; “It is principal and interest so that also will mean a significant bill, but I’m very pleased the banks have stepped up for this and taken that pressure off home owners who are worried about losing their homes for the next few months.”

Latest Updates From Banks

We will be updating this information as it is provided to us from the banks.

ANZ

27/03/2020 (sourced website)
Following the Government’s announcement, we’re working to develop a solution for pausing home loan repayments for up to 6 months (also known as a “home loan repayment deferral” or “mortgage repayment holiday”). This solution isn’t available just yet, but will be soon.

They also ask to please hold off calling the contact centre about this solution for now.

ASB (including Sovereign Home Loans)

1/04/2020 (adviser communications plus sourced website)
The Government announced that all banks will defer mortgage repayments for six months for customers whose incomes have been affected by COVID-19.

Access to emergency funds via a 90‐day temporary overdraft facility at a concessional interest rate. This is up to $5,000 for ASB home loan customers or up to $1,000 for ASB personal customers.

For customers seeking relief from fixed financial commitments and interest costs, we have options available for you depending on your circumstances.

If your income has been impacted by COVID-19:

    • Interest only repayments on home loans for up to 6 months
    • Mortgage repayment deferral for up to 6 months (interest will still be added to the loan, meaning your loan balance will increase)
    • Interest only and repayment deferral options for personal loan customers

If you have been impacted by any other COVID-19 related reason:

    • Interest only repayments on home loans for up to 3 months
    • Mortgage repayment deferral for up to 3 months (interest will still be added to the loan, meaning your loan balance will increase)
    • Interest only and repayment deferral options for personal loan customers

There is no loan to value restrictions (LVR) on eligibility and the mortgage repayment deferral (MRD) will not result in any charging or, where existing, any increase in low equity margins (LEM). This means that if the MRD interest capitalisation increases a customer’s loan balance above 80% LVR we will not charge an LEM, or if the MRD increases the customer’s LVR that moves them into a new LEM band we will not increase the LEM. This is very good news to get confirmed!

Important note about mortgage repayment deferral: interest is still charged and added to the loan, meaning your loan balance will increase, and you’ll likely pay more interest overall. Afterwards your repayments will likely be higher unless the loan term is extended.

Important note about loan terms being extended: Loan terms are not being extended at the time of moving customers on to the mortgage repayment deferral (MRD) or to interest only (IO) but loan term extension requests will be considered when customers are looking to move back to paying principal and interest (P&I) which will be in 3-months or 6-months.

Bank of China

26/03/2020
Bank of China (NZ) Limited is working on this and will have details to you as soon as possible.

BNZ

27/03/2020 (sourced website)
BNZ are offering a home loan repayment deferral for up to six months, or ‘interest only’ payments for up to 12 months, if your income has been affected by COVID-19.

They have set up an online form where you can apply: CLICK HERE

They have also confirmed that during the home loan repayment deferral interest will still be charged and will accrue, meaning your loan is increasing. Once you apply you will then be contacted and this should be explained to you, and possibly you will be given the option to extend the loan term to minimise the increase to the repayments after the home loan repayment deferral finishes.

In addition we have been told that you can choose to end the repayment holiday early and while this would normally trigger an early repayment charge, the bank has agreed to waive that charge on the basis that you are reverting to what you were previously on.

Please also note that the Rapid Repay accounts cannot be switched to interest only.

Co-Operative Bank

26/03/2020 (sourced: website)
The Co-operative Bank has published ways that they can support customers..
These include;

  • Defer your Home Loan repayments for up to six months with a repayment holiday.
  • Consider paying interest only on your Home Loan if your income is reduced.
  • Adjust your Home Loan or Personal Loan repayments down to the minimum amount.
  • Apply for financial hardship.

There is currently nothing specific about the mortgage holiday.

SBS Bank

27/03/2020 (sourced website)
SBS Bank have released the options to assist.

They are;
Loan Holidays (Mortgage Deferral) – you can now apply for a loan holiday for 6-months but it is important to understand that when your loan holiday ends you revert to paying both the principal and interest. Your repayment amount will be recalculated and is likely to be higher than you were previously paying because of the capitalised interest payments, unless you also extend your loan term.
Interest Only – you can switch your loan to interest only (term not specified) and when your interest-only period ends you will revert to paying both the principal and interest. If you do not extend the term of your loan, your repayment amount will be recalculated and is likely to be at a slightly higher amount than you were previously paying.
Extension of Loan Terms – they are also offering the ability to extend your loan term. This will help offset the increased payments at the end of the loan holiday or interest only period.

TSB Bank

31/03/2020 (sourced website)
On Tuesday 24 March the Government, along with the Reserve Bank and all retail banks, announced a six-month principal and interest Mortgage Payment Deferral option for mortgage holders whose incomes will be affected by the economic disruption from COVID-19.

In response to the Government’s announcement, TSB will be offering support to customers by:

  • Offering ‘Interest Only’ payments for up to six months
  • Offering a ‘Mortgage Payment Deferral’ for up to six months

Interest Only payments are where you only pay the interest, you won’t pay any principal on your loan. This helps to reduce your payments, however your loan balance will stay the same for as long as you are on interest only.

A Mortgage Payment Deferral allows you to take a break from making your contractual mortgage payment for up to six months. Interest will continue to be charged and will be added to your loan at each payment date. This is for “up to 6-months” and you can revert to paying your loans when your income returns to normal.
The end-result of a Mortgage Payment Deferral is that you’ll end up paying more over the life of the loan and you may face either increased future payments or a longer loan term, at the end of the payment deferral period. A Mortgage Payment Deferral allows you to take a break from making all of your contractual mortgage payment for up to six months. However, interest will continue to be charged and will be added to your loan at each payment date. The end-result is that you’ll end up paying more over the life of the loan.

You can use this link to apply for the Mortgage Payment Deferral: CLICK HERE

Westpac

25/03/2020
With the Government announcement yesterday we are drafting up a communication to be sent out later this afternoon to cover this off.

Latest Updates From The Non-Bank Lenders

We will update this once we hear more from the non-bank lenders.
At this stage we are not sure how they will be handling things, but will post here once we know.

One non-bank lender has said that ” as a non-bank mortgage provider, we are awaiting Government confirmation that this applies to non-bank mortgages as well. We expect to have confirmation in the coming days and will update our position once known” so we keep checking and we will update you once we can.

“more to follow”

You Can Contact Us With Any Questions Or Comments

Please feel free to contact myself with any questions or comments.

You can get all my contact details here: CLICK HERE

Our aim is to provide as much information as possible at this time.
We know it is stressful when so much is still uncertain, so please do make contact even if you just need some reassurance.

Disclaimer: We are proving information here that has been supplied to us.
We know that the situation is changing rapidly and will try and ensure that we have the latest information; however we cannot guarantee that.