The mortgage holiday extension will offer borrowers the option to continue their repayment deferment at the cost of accrued interest

What You Need to Know about the Mortgage Holiday Extension

Come September, Australians who have been hit hard economically by the pandemic will have the choice to commit to a further mortgage holiday extension. While on the surface this spells good news, the extension is not without consequence. When deciding whether to continue the deferment period, borrowers will need to evaluate if the benefit of prolonging the holiday will be worth the continued interest accrual.

Loan Deferment

Much earlier in the pandemic, the option for mortgage holders to pause their repayments was made available as a support measure to alleviate the financial burden caused by a foreseeable economic downturn. However, for many who have had their income disrupted, this pivot has been especially difficult and the thought of resuming repayments is an unwelcome idea. In response to this wide-spread sentiment, an extension to the mortgage holiday has been made available to some of the most severely impacted borrowers.

Mortgage Holiday Extension Implications

The extension of the mortgage holiday is forecast to impact as many as 800,000 borrowers, who have collectively already deferred in excess of $260 billion since the pandemic mortgage holidays were first made available. A major grievance with the pause relates to the delaying of payment obligation to a later date, in turn accruing larger debts and the likelihood of severe bill shock upon recommencement. For an average-sized Australian mortgage (that is $474,000 over 30 years), a six-month mortgage holiday will increase repayments by $65 per month for the remainder of the term.

To reduce the implications of this measure, the priority for any borrower who enters into the mortgage holiday is to reduce high-interest debts, such as credit cards. This is the most financially sound move and best way to make the most of the holiday.

What You Need to Know Before Extending

Anyone considering extending their mortgage holiday may need reminding that the short-term effect of reducing outgoing expenses is a very immediate benefit. After the conclusion of the mortgage holiday, unprepared borrowers may find themselves unequipped to handle the increased repayments. Anyone currently engaged in a mortgage holiday or planning on extending should still pay off as much of their loan as they can feasibly afford. This goes for both principal and interest repayments. Even if you cannot afford to make principal repayments, the long-term value is certainly improved by making interest-only repayments, as accrued interest is reduced.


The best advice we can give to any borrower considering the mortgage holiday extension is ‘don’t, unless you absolutely need to.’ While finance and debt management can be exhausting and stressful for many, savvy financial planning will make the future as easy as possible. If you’re unsure about whether you should extend your mortgage holiday, get in contact with the team at Provide Finance.