How does a pause work?

How does a pause work?

We have introduced a repayment pause for home loan customers impacted by COVID-19 and the current economic uncertainty.
  • You can request a home loan repayment pause at any time, which is subject to approval. We’ll also require you to provide information about your current financial situation before approval.
  • The duration and end date of your pause will be confirmed upon approval. The end date of your home loan repayment pause cannot exceed 31 March 2021.
  • Interest will continue to be calculated in the regular way and will be added to your home loan balance during this pause period. As a result, the balance of your home loan will increase, which will mean you pay more interest over the life of the loan, and your repayments will likely need to increase.
  • You can still make payments along the way, which will help repay interest charges and reduce your outstanding balance. You can also resume repayments or discuss restructuring your home loan (to reduce your repayments) at any point during the pause period.
  • We’ll be in touch before your repayment pause ends to understand your current financial situation and to discuss ways we may be able to assist you.
  • If you've previously had a home loan repayment pause and would like to discuss resuming a pause, please contact ME to discuss.
  • If you don’t qualify for a home loan repayment pause, we’ll discuss why, as well as what other additional support options may be available to you.

Meet Sarah – and find out how the pause impacted her interest.

Meet Sarah – and find out how the pause impacted her interest.

How might the home loan pause impact her interest and repayments?

Sarah has a home loan balance of $350,000, with 25 year term remaining, and a 3.60% p.a. variable interest rate, with a Flexible Home Loan with Member Package. This is what her repayments and interest payable would look like after a repayment pause period until thend of the loan term. 

Repayment pause Loan balance Repayments Interest remaining
No pause $350,000 $1,771 $181,497
Three months $353,186 $1,798 $184,221
Six months $356,330 $1,826 $187,021

How to apply.

How to apply.

Call ME to discuss if a home loan repayment pause is suitable for you.

You can call ME on 13 15 63 (8am – 8pm Monday to Friday, 9am – 5pm Saturday AEST) to discuss if a home loan repayment pause is suitable for your situation or to discuss other support options.

Please note: We will require you to provide us with information about your financial situation before a repayment pause is approved.

Options for resuming repayments.

Options for resuming repayments.

Below are five example scenarios to help you understand your options.

If you are currently on a home loan repayment pause and considering resuming repayments, these options will help you understand the impact to your home loan repayments and interest.

Please note all examples are based on Sarah who is an owner occupier and has a Flexible Home Loan with Member Package, with a variable interest rate of 3.60% p.a., and a home loan balance of $350,000 before her repayment pause. She paused her home loan for six months, and $6,330 in interest was added to her home loan, therefore making her new home loan balance $356,330.

To understand which options are available to you we’ll need to speak with you first. Please call ME on 13 15 63 (8am – 8pm Monday to Friday, 9am – 5pm Saturday AEST).
Graphic example of Increase your repayments over the life of your loan to cover your accrued interest

1. Increase your repayments over the life of your loan to cover your accrued interest.

If your financial situation has improved and you're ready to resume repayments, you can resume at any time during your pause. The interest you've accumulated during your pause period, will be added to the balance of your loan, which will then increase your repayment amount over the life of your loan.

Sarah has been on a repayment pause and is ready to resume her repayments. At the end of her six month pause she will have accumulated $6,330 in interest. To repay this, her repayments would go up by $55 per month, from $1,771 to her new repayment amount of $1,826.

Resume repayments online

View important information about this option

Change all or part of your loan to a fixed rate.

2. Change all or part of your loan to a fixed rate.

If you’re on a variable rate, you may be able to reduce your repayments by fixing all or a portion of your loan on a lower interest rate. If you are already on a fixed rate, you could move to a lower fixed rate, but please note a prepayment fee will apply. For some people this fee will outweigh the benefits of the lower fixed rate.

Sarah is on a variable rate, with an loan-to-value ratio of less than 90%, and wants to reduce her repayments by moving to a fixed rate. If she moves to a one-year fixed rate of 2.19% p.a. her repayments will decrease by $259 a month to $1,567, and she will save $5,896 in interest over the life of her loan.

View important information about this option

Loan term extension

3. Loan term extension.

You may be able to offset the impact of the repayment pause by extending the length of your loan term so your repayments decrease or return to what they were before pausing. Even though your repayments will be lower, in extending your loan term, you will take longer to pay off the total loan balance and will pay more interest over the life of the loan than if the term is not extended.

Sarah started her home loan on a 28 year term and has been paying off her loan for the last three years. She wants to extend the term remaining on her loan from 25 years back to 27 years. Her repayments before the pause were $1,826, and after the loan term extension, her new repayments will be $1,740. This means her repayments will reduce, however, she will now pay $16,674 in additional interest over the life of the loan due to the term extension.

Make interest-only repayments

4. Make interest-only repayments.

This would give you short-term repayment relief as you’ll only need to pay the interest charges for up to 12 months. When your interest-only period expires and your repayments revert to principal and interest payments, these principal and interest repayments will be higher than your current repayment amount as your loan balance will not have reduced during your interest-only period, and there will be a reduced loan term remaining to pay out the outstanding loan balance.

Sarah moves to interest-only repayments for a year, which means her repayments will decrease by $608 a month, going from $1,826 down to $1,217. At the end of the one-year interest-only period, her repayments would then increase to $1,874, which is higher than her original repayment. Her repayments will increase at the end of the interest-only period because she will need to start making principal and interest repayments on her home loan. An additional $6,400 in interest would be charged over the life of her loan.

View important information about this option

Redraw reduction

5. Redraw reduction. 

This option involves reducing your available redraw amount which will reduce your minimum repayment amount. The minimum repayment amount is calculated on the total loan balance for your loan – the balance owing and any available redraw you have. By reducing your available redraw, you are reducing your total balance owing and therefore your minimum repayment amount.

Sarah was ahead on her repayments and has $30,000 sitting in her redraw. Because of this she was on track to pay off her loan earlier than the contracted term and save $15,702 in interest (had she not had a redraw). She decides she wants to reduce her minimum repayments, so she asks ME to reduce her redraw to $0. Her repayments go from $1,923 to $1,826, saving her $97 per month. By reducing her redraw she is no longer on track to pay off her loan earlier, therefore she is no longer saving the $15,702 in interest.

View important information about this option

What if I can’t resume?

What if I can’t resume?

If none of the above options are suitable for your financial situation, please call ME on 13 15 63 (8am – 8pm Monday to Friday, 9am – 5pm Saturday AEST) to discuss other ways we may be able to assist you during this time.

Please keep in mind that if we can’t get in touch with you, your repayment pause will end and your repayments will then resume. We encourage you to contact us to discuss other options.

Further financial help.

Further financial help.

National debt hotline.
If you feel you need some additional, broader guidance with your finances, including access to free financial counselling, you can visit the National Debt Helpline.

Mental health support services.
There are services available to assist with any stress or anxiety about financial issues, such as Lifeline and Beyond Blue.

Financial counselling.
Financial debt helpline that provides free, independent and confidential financial counselling. Learn more

Financial hardship.
You may need further financial assistance, so our Financial Hardship teams are here to work with you one-on-one to find ways to help you – whether you need help managing bill payments or you’re a family struggling to make ends meet.

Check our our financial hardship page for more info, or Call ME as soon as you can on 13 15 63 Monday to Friday 8am–8pm (AEST) and Saturday 9am–5pm (AEST), and if you’re overseas please call ME on +61 3 9708 4001.