Jul 14, 2020 1:57:13 PM

What Happens When Your Mortgage Repayment Deferral Ends?

Topics: Financial Health, Refinancing, COVID-19 0

Thousands of Australian mortgage holders took up the offer of a mortgage repayment deferral when the COVID-19 pandemic hit in March 2020. Since then, banks have deferred approx. 780,000 Home Loans, totaling a massive $236Bn. The big question now is what happens to those mortgages when the six-month deferral was meant to run out in September this year?

Untitled design (64)

Mortgage Deferral Scheme

Under the mortgage deferral scheme, banks gave customers an option to pause their mortgage repayments for up to six months. This was done to help families who are financially impacted by the Coronavirus crisis, by giving them some breathing space with a deferral on home loan repayments.

Close to 500,000 Australians opted for a mortgage repayment ‘holiday’ and, as Australia heads into a recession, many homeowners are concerned about resuming their mortgage repayments while facing a drop in their pre-COVID income.

Adjusting Your Mortgage Repayments

Banks are aware that some customers may need further support and have already begun talking to customers about how to manage mortgage repayments come September when the mortgage deferral scheme is meant to end.

Victoria, now establishing a new lockdown period for a further 6 weeks due to community transmission and an increase in cases, has resulted in the Banks, after discussion with APRA and ASIC, agreeing to extend the assistance till March 2021 for customers who are unable to meet their obligations due to COVID-19 impacts. This will be determined on a case by case basis.

While some customers may be eligible for an extension on their mortgage repayment holiday for up to 4 months, others may need to extend their loan term – perhaps moving from a 25 year mortgage to a 30 year mortgage – to keep repayments as close to pre-deferral levels as possible.

For those who can afford it, adjusting repayments to a higher amount in order to achieve the same loan term could mean you catch up on your deferred repayments. It’s important you find the best solution to fit your unique situation.

While extending your loan term means you’ll add more years onto your loan and hence more interest repayments over the life of your loan, it could help you get through these tough times with lower repayments, just until you’re back on track again.

Let Us Help You

As with all things financial, it’s vital you seek advice sooner rather than later. If you are concerned about resuming your home loan repayments at the end of September, we urge you to talk to your bank or mortgage broker about your options.

Please get in touch with our team if you need sound financial advice about planning your financial future in these uncertain times. We’re in this together!


While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken by Finservice Pty Ltd (Mortgage Express) for any errors or omissions. This publication does not constitute personalised financial advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. A Disclosure Statement is available on request and free of charge.

Finservice Pty Ltd (Mortgage Express) is authorised as a corporate credit representative (Corporate Credit Representative Number 397386) to engage in credit activities on behalf of BLSSA Pty Ltd (Australian Credit Licence number 391237) ACN 123 600 000 | Full member of MFAA | Member of Australian Financial Complaints Authority (AFCA) | Member of Choice Aggregation Services.