Navigating mortgage repayment deferrals – With Insights from Mortgage Broker Steve Keramidas
- Samantha Keramidas
- Jun 6
- 3 min read
Before diving into the specifics of deferring mortgage repayments, it's essential to grasp what a payment deferral means. A mortgage payment deferral allows you to postpone overdue or missed payments by moving them to the end of your loan term. This option enables you to maintain your current monthly payment schedule while bringing your loan back into good standing.
Here are some scenarios where you might consider a mortgage payment deferral:
• Falling behind on mortgage payments or nearing the end of a forbearance plan.
• Inability to catch up on outstanding balances through a repayment plan.
• Experiencing financial hardship due to the economic impacts of the COVID-19 pandemic or other unexpected events.
Many Australian banks have introduced support measures, including deferring home loan repayments for up to six months. While this relief can be beneficial, it's important to be aware of the potential drawbacks, particularly regarding your credit score.
Reviewing Your Financial Situation
Just as you would when applying for a loan, lenders conduct a thorough review of your financial situation when considering a deferral request. This review typically involves an assessment of your total assets, liabilities, savings, and income records. The aim is to gain a comprehensive understanding of your financial position and credit history.
Mortgage Broker Steve Keramidas emphasises the importance of preparation when applying for hardship assistance:
“Presenting a clear and realistic picture of your financial circumstances is crucial. Whether it's a temporary drop in income or a more serious setback, being transparent with your lender improves your chances of receiving a tailored hardship solution.”
If you can demonstrate significant financial hardship—such as job loss or a substantial reduction in income—coupled with limited savings or alternative means to meet repayments, lenders may offer hardship terms. These often include customised packages designed to help you through a deferral arrangement.
Exploring Interest-Only Repayments
In addition to evaluating your financial situation, some lenders might offer the option to switch to interest-only repayments for a specified period. These arrangements often include a 90-day review period. During this time, the lender may capitalise the interest, meaning it’s added to your loan balance. When your regular repayments resume, they’ll be recalculated based on the new, higher loan amount—comprising both the original principal and the accumulated deferred interest.
Considerations and Implications
While mortgage repayment deferrals can provide much-needed breathing room, it's vital to consider the long-term implications. Deferring payments increases your loan balance and can result in higher monthly repayments down the track.
Steve Keramidas encourages homeowners to seek professional guidance before committing to a deferral:
“These options can help during tough times, but they’re not always the best long-term solution. Speaking with a mortgage broker can help you explore alternatives such as refinancing, adjusting loan terms, or accessing other support options.”
Final Thoughts
The opportunity to defer mortgage payments can be a valuable lifeline during financial hardship. However, it’s essential to approach it with a full understanding of the potential consequences. If you're considering a deferral or feeling overwhelmed by your mortgage, reaching out to an experienced broker like Steve Keramidas can ensure you're making an informed and strategic decision for your financial future.
Disclaimer: This article provides general information only and may not reflect the publisher’s opinion. None of the authors, the publisher or their employees are liable for any inaccuracies, errors or omissions in the publication or any change to information in the publication. This publication or any part of it may be reproduced only with the publisher’s prior permission. It was prepared without taking into account your objectives, financial situation or needs. Please consult your financial adviser, broker or accountant before acting on information in this publication.
