With many businesses and services forced to close under the latest Federal Government restrictions to try to curb the spread of coronavirus, many Australians are feeling the pinch when it comes to finances. Especially those with a mortgage.

At least 1 million Australians are facing unemployment as a result of the crisis.

It has many wondering what the banks are doing when it comes to home loans.

Will mortgages be put on hold?

The big four banks have all announced that their customers will be able to pause mortgage payments.

If you're with Commonwealth

You will be able to defer home loan repayments for up to six months

You will be able to defer home loan repayments for up to six months Interest will be capitalised

Interest will be capitalised Interest and charges will be added to your loan balance

Interest and charges will be added to your loan balance Your loan balance will be recalculated at the end of the support period

Your loan balance will be recalculated at the end of the support period Your loan term will be extended so repayments stay the same as they were before you started the deferral

If you're with Westpac

You will be able to defer repayments for three months

You will be able to defer repayments for three months A three-month extension is available after review

A three-month extension is available after review This option is for people who have lost their job or income as a result of coronavirus

This option is for people who have lost their job or income as a result of coronavirus Deferred interest will be capitalised, so your repayments will increase for the remainder of your loan term

If you're with NAB

You will be able to defer your repayments for up to six months

You will be able to defer your repayments for up to six months There will be a three-month checkpoint with the bank

There will be a three-month checkpoint with the bank You are eligible if you are a home loan customer aﬀected by coronavirus

You are eligible if you are a home loan customer aﬀected by coronavirus This applies for owner-occupiers, investors or those on a principal and interest or interest only repayment schedule

This applies for owner-occupiers, investors or those on a principal and interest or interest only repayment schedule You will still be able to redraw during the repayment pause

If you're with ANZ

You may be able to put your repayments on hold for six months

You may be able to put your repayments on hold for six months Interest will be capitalised

Interest will be capitalised The bank will check in with you after three months



And if you're with Bendigo Bank (Australia's fifth-largest bank)

You can apply for six months of relief.



Do I need to provide some kind of proof?

Some banks explicitly state only customers affected by coronavirus will be eligible to pause their repayments.

But whether you need to provide proof (such as a doctor's note or severance form) to verify you have been affected by coronavirus depends on which bank you're with.

CBA says no evidence is required to request a deferral, although you may be asked to declare you have been impacted by coronavirus.

Westpac is currently looking at each request on a case-by-case basis rather than imposing blanket requirements.

ANZ's stance seems to be that if you have been up to date with your repayments, you will most likely be eligible.

NAB customers wanting to defer payments will not need to provide any evidence. A pause will be applied if it's requested.

What's the catch?

While being able to defer payments may be your best (or only) option at the moment, there is a catch.

All of the banks have announced interest capitalisation.

That's where the interest you don't pay during your period of deferral is added to your outstanding loan balance.

For example: If you have a $400,000 home loan at an interest rate of 3 per cent, you would be paying $1,000 a month in interest.

If you pause your home loan repayments for six months, the interest amount is added to your outstanding balance.

So in six months' time, you will be looking at paying off a $406,000 loan.

ABC business reporter David Taylor put it simply in his recent analysis piece:

"That's a very complicated way of saying, "after you're done with your mortgage 'holiday', as some are calling it, you'll have to keep up your repayments, and your balance will be bigger than when you started the deferral process."

ANZ CEO Shayne Elliott told Perth radio station 6PR, the reason banks are capitalising interest comes down to Australia's banking laws.

"If we don't charge you interest, even if we defer it, your loan becomes what they call 'impaired' and that means that we have to go and allocate a whole bunch more capital to support your loan. "If we do that, as an industry, we will not have enough capital. That wouldn't be in anybody's interest."

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How do I pause my repayments?

For CBA customers, the process comes under the Hardship Request section of the website.

You will need to log into your Netbank account and answer five questions about what you need help with.

The bank will then call you within seven business days to discuss your options. Tap here to get started.

The Commonwealth Bank is offering support for home loan customers. ( ABC News )

For Westpac customers, go here and tap the home loan repayment pause button and follow the instructions.

Westpac Bank's COVID-19 Customer Support page. ( ABC News )

NAB customers will need to fill out this coronavirus (covid-19) support package form or call 13 22 65 for support (although you may be waiting a while if you do decide to call due to a high volume of calls).

NAB's COVID-19 support page for home owners. ( ABC News )

ANZ customers will need to call the bank, but due to a high volume of requests, you may need to request it calls you back. Head to this page and scroll down to "Pause your repayments" and follow the directions.