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What is a Repayment Holiday?

You would have heard in the media in recent weeks that lenders across the country are offering their customers Repayment Holidays or Loan Deferrals. Some lenders are referring to them as Repayment Pauses.

So what does that actually mean?

In essence it means that the bank will add the usual interest to your loan over the next 3-6 month period however you will not be required to make repayments in this time. It will capitalise the interest during this period. This is considered a Financial Hardship Arrangement.

In effect this means that at the end of the "holiday" you will have a higher loan balance and your minimum repayment amount will likely increase to keep your loan on track with your original loan term.

The banks have agreed that during the time of COVID-19 any borrowers who are granted a six-month deferral on loan repayments will not have their credit rating affected as a result of the holiday, so long as they were up to date with repayments prior to the economic impact of COVID-19.

Struggling to repay your loan? In that case, the sooner you contact your lender, the better. You can do it by phone (which might involve a long wait) or over the internet.

We would be happy to help you through the process so contact Rebecca on 0448 258 716 for more information.


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