Mortgage holidays amid COVID-19

April 8, 2020

in COVID-19,Property

The effects of the Covid-19 pandemic on employment, and payment of wages and salaries has serious implications for home owners and their ability to maintain their obligations in terms of their mortgages.

All major trading banks are providing relief in this respect.  There are a number of options including:

  • Deferral of loan repayments (put a temporary pause on your payments – usually for  around 6 months).
  • Switching to paying interest only (usually for around 6-12 months, depending on your bank).
  • Reduction in loan repayments (generally if you are currently repaying more than the minimum required).
  • Extension of the loan, with a temporary reduction in principal payments.

A mortgage holiday will give you some breathing space in tough times and will not affect your credit rating, but remember:

  • You will continue to be charged interest on your loan during the “pause” period, and as a result your home loan balance will increase.
  • Once you re-start your repayments, there will usually be an adjustment made so that the loan is paid off over the original loan term.
  • Alternatively, repayments may be kept the same, and the term of the loan extended.
  • Interest only repayments will result in an extended loan term.
  • It is important that you contact your bank and arrange a mortgage holiday before you default on your payments.

If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:

Carol Allen
09 353 6675

The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.

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