The COVID-19 loan deferral program and credit reporting amnesty is now over, which means banks will report any late repayments on mortgage to credit agencies unless hardship arrangement has been discussed.
The banks’ mortgage deferral program and subsequent credit score reporting amnesty officially ended on April 1.
The package was created during the peak of COVID-19 to provide loan repayment relief for loan borrowers facing financial hardship.
It is advisable to check and plan your ability to repay your home loan, if it might be affected in the months ahead, then it’s important to act now, to avoid impacting the credit file.
The most appropriate course of action will depend on individual circumstances, which can be broken up into two categories as below.
Category 1: Repayments will be tight, but doable
If the upcoming loan repayments are looking tight, but doable, there are some financing options that might make repayments more manageable.
– switching to interest-only repayments for a period of time,
– renegotiating your rate with your current lender,
– refinancing to another lender,
– debt consolidation, or
– a combination of these and other measures.
Category 2: Repayments may be effected
If the chances of making the repayments are looking a little grim, it’s important to get in touch with the bank today to discuss entering into a hardship arrangement.
Not only will this potentially give some breathing space on the repayments, but it will help keep any missed payments off the credit file, as the Australian Banking Association states below:
“For customers that enter into another form of hardship or forbearance arrangement with their bank, banks will not report the repayment history information. Instead, they will leave the field blank for the duration of the arrangement.”
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