This article discusses the advantages and disadvantages of deferring your home loan and uses a case study to demonstrate the issues that may be faced if this decision is made close to retirement.
When the COVID-19 pandemic struck in 2020 and Australians everywhere were forced to stop work and stay at home, the big banks reached out to affected customers offering to suspend their loan repayments and provide some much-needed financial relief.
So great was the demand for this support, that at the height of the pandemic, the Australian Prudential Regulation Authority estimated one in ten of all home loans were subject to some type of repayment holiday or deferral arrangement.
While the number of deferred loans eased towards the end of 2020, the emergence of the COVID-19 Delta strain saw hardship assistance requests again rise in August 2021, almost tripling from 20,000 to 57,000 cases.
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