"My income has been greatly reduced during the current Covid-19 lockdown. Can I defer my mortgage repayments and if so, will this affect my credit rating?"
- Question from Robert in Sydney
Top answer provided by:
Thanks for your question Robert, and sorry to hear about your situation during the Covid-19 lockdown.
We are seeing a lot of people with cashflow concerns during lockdown situations if they are not able to run their businesses from home and maintain the same level of customer activity.
One of the few shining lights during the Covid-19 lockdown is the understanding from institutions such as banks, given at least 3 million households in Australia currently have a mortgage.
In 2020, the Australian Banking Association (ABA) worked with the Federal Government to find relief for mortgage holders, and they have recently done so again.
As of July 2021, the ABA announced banks will be providing support for those affected by Covid-19 lockdowns, in which up to 3 months of repayments will be deferred. This will mean your loan term would also be extended by this same period, 3 months.
You can find out more about the deferral and the relief that Australian banks offer here
One area to check is if your specific banking lenders offer this currently, and the process in order for you to be able to apply for the 3-month deferral.
Generally, a credit rating is affected during events such as not paying bills on time, missing a number of loan repayments, defaulting on loans or applying for too many additional credit products (eg. personal loans, credit cards).
I would expect a deferral on repayments supported by the bank will not affect your credit rating, but it would be best to discuss this with your lender to make absolutely sure this is the case.
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