Covid-19 Mortgage Holiday Scheme – What We Know | Ep. 198

In this episode, we discuss the proposed and accepted mortgage repayment holidays that the major retail banks will be offering due to the Coronavirus outbreak. 

The Covid-19 outbreak will hit some New Zealanders hard. To make sure that property owners don't lose their homes due to loss of income, the Finance Minister, Grant Robertson has introduced this scheme. 

If the shutdown has impacted your income then you can apply for a mortgage holiday on both the principal and interest payments on your mortgage for 6 months. 

Interest will still accumulate on that loan, however. Banks will then add the interest costs on top of the loan, "capitalising" these costs.

For instance, if you have a $300K mortgage at 3.5%. Over six months you will add $5,250 on to the principal of the loan. While this has accumulated over six months, it will set your mortgage back by 14-15 months. 

If you need to take this mortgage holiday to keep your home, then it is well worth doing. However, if you don't need to then you will likely be better off by not applying for the mortgage holiday. 

Instead, you could decrease any voluntary payments and just pay the minimum on your mortgage. Or, you could temporarily move your mortgage from principal and interest, just to interest payments.