What deferring your home loan repayments means

Want to know more about what it means to defer your home loan? We break down costs, how to get started and your alternatives.

Deferring your home loan repayments means that for a period of time, you won’t have to make repayments on your loan. Remember, you’ll still be charged interest over this time and you’ll also need to pay back the total amount in full to your lender eventually. Deferring your home loan repayments today could mean paying more over the longer term.

How much will deferring your home loan repayments actually cost

When you defer your repayments interest will continue to be charged and added to the balance of your loan, this is known as ‘interest capitalisation’. At the end of your deferral period, your regular repayment amount might be higher than it was previously because of that amount of interest added to your loan.

Once the repayment deferral ends

Once your repayment deferral has come to an end, the terms agreed by your lender and you come into play.

Often, this means either: 

• Your minimum repayments to your lender might be raised to reflect interest added up during this time; or
• If the length of your entire loan term has been extended, you might be able to pay roughly the same minimum repayment as before, but you would be paying interest for a longer period of time.

Before speaking to your lender about deferring your repayments, you might want to read up on repayment types to explore your options. 

Case study: Interest capitalisation

Video1

• View video transcript (PDF)
• View our infographic (PDF)

Interested in tailoring the math towards your own financial situation? 

You might want to check out our home loan repayment calculator. 

How deferring home loan repayments can impact your credit score 

If you and your lender have agreed to defer your loan repayments, this should not impact your credit score. However, if your lender does not agree to defer your repayments, that's a different story: your credit score will most likely be impacted.

Other options for staying on top of your home loan

If your circumstances have changed, you’re not alone. We’ve put together a handy hub of pages for staying on top of your home loan. 

If you’re banking online with us, you can explore the following options by logging into your account:

• Ensure your repayment amount is reduced to the minimum amount
• Redraw extra payments on your home loan 

You might also consider switching to interest only repayments or extending your interest only period.