Deferred your home loan? What you need to know about restarting your repayments

The ability to pause home loan repayments brought welcome relief to many in 2020. But with the COVID-19 loan deferral period ending nationwide on 31 March 2021 due to regulatory reasons, restarting your repayments is likely to be a priority.

Almost a million Australians took up the offer

Almost a million Aussies deferred their home loan repayments in 2020, giving them the space to assess their situation and manage through business closures, reduced hours and loss of income. But by the end of 2020, approximately 95% of home owners who’d taken up the offer to defer their repayments had recommenced paying their loans.

As the support comes to an end, returning to repayments is likely to be a priority – even if that means making some adjustments to the household budget. It could help you get back on track and save you accumulating interest in the long run.

The sooner you restart, the less you’re likely to pay

When you put your repayments on hold, you’re still charged interest on the amount you’ve borrowed. This means you’ll need to pay that accumulated interest back over the remaining loan term, along with the loan amount. This is known as interest capitalisation.

Once your repayment deferral period ends, your home loan repayments will start again and the terms agreed between your lender and you to catch up on the repayments you paused come into play.

Often, this means one of two things:

• Your minimum repayment to your lender may have increased to reflect the interest accrued during this time; or 
• The length of your entire loan term may have been extended, which means you might be able to pay roughly the same minimum repayment as before, but it’s important to note that you’ll be paying interest over a longer period of time.

Tips for prioritising your loan repayments

Making adjustments now can help you restart your repayments and minimise interest owing over the life of your loan. You might consider:

Adjusting your budget

Finding a balance between what you need and what you want is what makes a budget work. Divide your expenses into “wants” and “needs” to help ensure you cover bills and essentials first, then plan how you’ll spend anything left over on the things you really want.

We have some handy budgeting tools that can help

Reducing your everyday expenses

Reducing your costs doesn’t always mean extreme sacrifice. Sometimes, it’s about changing providers for your essential services, reconsidering what plan you need for a particular service, or cleaning up some of the subscriptions you don’t need or use.

Be mindful of what you spend

It all adds up, so make sure that when you spend, you do so mindfully. For more tips on budgeting, managing debt and planning your spending, check out our four-step financial wellbeing check-in.

Investigate all your options

Aside from becoming a bit savvier with your money, there are number of things you could potentially do that may assist you in restarting your repayments.

Consider using other accounts to make repayments, accessing funds through redraw^disclaimer, reducing your repayments, switching to interest only repayments, or fixing your interest rate temporarily.

For more information on these options, visit our COVID-19 home owners page.

Ready to restart your loan repayments?

If you’re an ANZ customer, we’ll be in touch ahead of your loan deferral period ending and your repayments resuming. However, if your situation has improved you can restart your repayments at any time.

If you’re concerned about meeting your repayments once your deferral period ends, please visit our financial assistance page or reach out to the ANZ Customer Connect Team on 1800 252 845.

We’re committed to helping you stay on top of your home loan and will continue to help where we can.