Covid-19 Update
Over last 24 hours, we have received numerous queries about Mortgage Holiday Repayment Scheme. Banks are in process of working out these details. Here is what we understand from the announcements made by the Government –
Mortgage Holiday Repayment Scheme
Retail banks have agreed to a mortgage holiday repayment scheme for those affected by Covid-19, Minister of Finance Grant Robertson has announced. The six-month principal and interest payment holiday for mortgage holders and small business customers whose incomes have been affected by the economic disruption from Covid-19.
Finance Minister Grant Robertson explains the six-month Mortgage Holiday Repayment Scheme. People who take a six-month mortgage holiday, will add principal and interest to their mortgage, which could significantly jump up their loan.
He told Newstalk ZB’s Mike Hosking this morning that at this stage the Government did not know how many people would take up the offer, which is open to people whose incomes have been affected by the COVID-19 coronavirus.
“The criteria we have put in place, or the banks have put in place is around being affected by Covid-19, and clearly many mortgage holders will have been and will be.”
Robertson said the option gave people time and the security of knowing they would not lose their home.
“It just defers the payments but they will end up being added on to the mortgage at the end. “It is principal and interest so that also will mean a significant bill, but I’m very pleased the banks have stepped up for this and taken that pressure off home owners who are worried about losing their homes for the next few months.”
So in simple terms it means, Mortgage Payment Repayment Holiday is just a deferral of your commitment to repay the loan. Interest is not going to be written off, but it will keep accruing. For eg. Let’s say you have a mortgage balance of $500,000 today. For next 6 months, interest accrued is say $10,000. After 6 months, your mortgage balance will be $510,000.
Banks may propose options to increase your loan repayments or to extend your loan terms to cover the accrued interest.
Renters
Finance Minister Grant Robertson announced a freeze on rent increases as the country heads into level four of the four-stage COVID-19 alert system. It does not exempt tenants on meeting their payment obligations.
For tenants experiencing significant loss of income as a result of the lockdown, Robertson says support, such as Accommodation Supplement, is available through the Ministry of Social Development (MSD).
For tenants living in rentals, the Government is yet to announce any policy on rent payments. Tenants must continue to pay their rents on time unless facing financial issues, where they can seek help from Work and Income for assistance.
While the details are being worked out, we urge you to stay calm and check our website – https://www.
We will keep you posted with all the updates from banks as they make it available to us.