Banks suspending business and home loan repayments, extending overdraft, interest still applies

Earthquake affected Christchurch homeowners and businesses are being offered some reprieve from banks in the forms of loan suspensions and extended overdraft limits at reduced interest rates.

Terms vary among banks but in some cases homeowners and small businesses will be eligible to put loan payments on hold for 180 days. Additionally, overdraft limits are being extended at discounted interest rates.

BNZ for example, in its relief package, is offering overdraft limits up to NZ$50,000 for small business loans at a rate of 5%. Homeowners are eligible for NZ$20,000 overdraft limit, also at a rate of 5%.

Westpac is offering an emergency overdraft of 45 days at 5%, with a further 45-day term if required. Early repayment costs for mortgage holders whose homes have been destroyed will be waived. Adjustment fees for those wanting to restructure home loans are also being waived.

There is also reprieve on credit cards in some cases. BNZ is waiving fees on late payments for customers unable to make payments. At the same time, credit card limits are being raised to NZ$10,000 or doubled, whatever is lower. Temporary overdraft facilities at 5% interest are also on offer.

While a mortgage holiday may provide temporary relief, consumer advocates urge caution. In most instances, while repayments are suspended the interest owed continues to mount. Effectively you pay extra for the privilege of getting temporary break.  (For more read "Holidays hidden sting'')

According to one example prepared by Mortgage Consultant Geoff Hill, a three-month holiday on a NZ$250,000 mortgage (at a two-year-fixed rate of 6.69% amortised over 30 years) would end up costing an extra NZ$6,389 - over the long-term.

Hill's advice to homeowners following the Sept.4, 2010 earthquake was to consider all options before taking a holiday. At the very least, reading the microscopic fine print trailing those tempting offers.

Here's a sampling of some of the earthquake packages on offer from New Zealand's major banks.

SBS (Click here for details)

EMERGENCY FUNDS WITH AN OVERDRAFT FACILITY FOR UP TO 90 DAYS

 

Of up to $10,000 for SBS Bank home loan customers at the special variable rate of 1.25% below SBS Bank’s housing variable rate (subject to approval). The current rate is 4.9%. Approved applications will receive urgent, same-day processing

 

Ability to suspend home loan repayments for three months

• Including the choice of adjusting the loan term or adjusting repayments

 

No early repayment fees

 

• When repaying a fixed home loan where the home is destroyed or has suffered major damage as a result of the earthquake

 

No establishment or adjustment

• When needing to establish or restructure a home loan as a result of the earthquake

Lending criteria applies. Interest rates are subject to change. SBS Bank terms and conditions apply

 

No withdrawal or break fees.

On a SBS Bank Term Deposit or Term Fund accounts, assuming hardship is proven. No penalty fee on withdrawals from Incentive Saver accounts

ASB Earthquake help-line 0800 272 007 (For details click here.)

For personal customers affected by the earthquake, please call ASB Contact Centre on 0800 272 007 between 8am – 8pm to talk to us about any of the following:

• access to emergency funds with a 90-day overdraft facility of up to $10,000 for ASB home loan customers and up to $2,000 for other ASB personal customers at the special variable rate of 1.25% p.a. below ASB’s housing variable rate. The current special variable rate is 5% p.a.
• access to your funds in an ASB Term Deposit or ASB Term Fund account without paying any withdrawal costs
• the option to suspend home loan payments for up to 3 months (interest will still be added to the loan)
• no Early Repayment Fees when repaying a fixed rate home loan, where a home is destroyed or suffered major damage as a result of the earthquake
• no establishment or adjustment fees when needing to establish or restructure a home loan as a result of the earthquake
• support for customers working with IAG on claims over and above the Earthquake Commission cover
• immediate consideration of requests for emergency credit limit increases and review of credit card installment repayments

Lending criteria applies.  Interest rates subject to change.  ASB terms and conditions apply.

To discuss any of these options, or to simply talk to us about your individual needs please call ASB Contact Centre on 0800 272 007 between 8am to 8pm 7days a week.

BNZ (For full details of BNZ's relief package click here:)

For specific details on how we can help you, please contact your BNZ Partner, visit your nearest store or call 0800 275 269. Small business customers can contact 0800 BNZ SME.

Assistance for Partner's clients

• Immediate temporary funding of up to $500k for infrastructure type expenditure for up to 180 days at an interest rate of 5%
• Up to $100k temporary overdraft limit for up to 180 days at an interest rate of 5% to cover other short term funding requirements resulting from the earthquake
• All fees and margins waived for temporary funding
• Loan repayments can be suspended for up to 180 days.

Retail and small business

• Waiver of early withdrawal costs for term deposits to enable customers to access cash for emergency purposes.
• We're offering up to $50k temporary overdraft limit for up to 180 days at an interest rate of 5%.
• Loan repayments can be suspended for up to 180 days.

Housing loans

• We're offering up to $20k temporary overdraft limit for up to 180 days at an interest rate of 5%.
• Loan repayments can be suspended for up to 180 days.

Credit cards 

• We're offering a temporary credit limit increase for up to 180 days to a maximum of $10k or double your existing credit card limit (whichever is lower). This will be at the normal interest rate cost.
• Or, as an alternative, we are offering a temporary overdraft facility for up to 180 days to a maximum of $10k or double your existing credit card limit (whichever is lower). This will be at an interest rate of 5%.
• We will also waive the penalty fees on late credit card payments for those customers who are unable to make a deposit.

Customers without lending     

• Customers who only have deposit funds with us can have access for up to 180 days to a  temporary overdraft facility of up to $10k. This is subject to insurance cover confirmation. This will be at an interest rate of 5%.

Deposits

• We're waiving the penalty withdrawal fees on term deposits to allow customers access to cash for emergency purposes.

*Qualifying criteria and overdraft maximum limits may apply. Some lending criteria apply.

Westpac: For details on Westpac's relief package

Personal Customers; call 0800 400 600

• Access to an emergency overdraft facility for a 45-day term at a special interest rate of 5%, with a further 45-day term if required, under the same terms and conditions. All establishment fees will be waived.
• A 90-day mortgage repayment holiday (please note that interest will continue to be added to the loan for the repayment holiday period)
• No early repayment costs for customers who have had a home destroyed or have suffered major damage as a result of the earthquake and wish to repay their fixed rate home loan.
• No adjustment fees for customers wanting to restructure a home loan as a result of the earthquake.

Business Customers:
For our business customers affected by the earthquake, please call your relationship manager or call 0800 177 567 to talk about how we can help, including the following options:

For small business customers impacted by the earthquake:

• Access to a temporary overdraft facility of $20,000 for up to 90 days at a special interest rate of 5%, with no application fees or penalty interest to apply.

Commercial/Corporate/Agribusiness customers:

• Access to a temporary overdraft facility of $500,000 for up to 90 days at a special rate of 5%, with no application fees or penalty interest to apply.
• A waiver of early withdrawal costs for term deposits.

Kiwibank Support for customers affected by the earthquake

Any Kiwibank Home Loan and Business Banking customers that live in the Christchurch area who have been affected by the earthquake will be offered:

• three months repayment holiday on their loans (including business banking loans)
• $1,000 overdraft or increase of $1,000 to existing personal overdraft or revolving credit facilities.

Home Loan customers can call 0800 222 224 for assistance.

Business Banking customers can call 0800 601 601 for assistance.

ANZ  Support Package for affected customers

• suspend repayments on all loans, including credit cards, for up to three months (with interest capitalised)
• waive fees associated with restructuring finances considered necessary due to earthquake impacts
• waive early withdrawal costs for term deposits
• consider temporary adjustments to customer lending limits including credit cards to assist them to cope financially with unexpected costs arising from the earthquake

Application of the above measures will be assessed on a case-by-case basis.

TBS Earthquake support package

0800406406

For Christchurch based borrowers who:

• Have a mortgage:

- 3 month loan repayment holiday or conversion to interest only facility for up to 6 months.
- Option to restructure borrowings immediately to alleviate additional financial pressures.
- Additional borrowings of up to $10,000 for urgent personal effects, excesses imposed by EQC and insurers, or loss of income.
- Temporary emergency Overdraft up to $5,000 for additional personal expenses.
- All normal application fees payable are waived.
- No early repayment fees where mortgaged home is destroyed or uninhabitable.
- Fast-track loan approval process in place.

• Have a Personal Loan or Welcome Home Loan:

- Up to 3 months payment holiday.

Depositors

- Access to term investment funds for emergency purposes without early withdrawal costs*.
- Consideration of up to $2,000 short term emergency funds for personal needs.

Other useful links:

Earthquake Commission; A householder's guide to coverage 0800 326 243

Here's a statement from the Earthquake Commission, which you can also find on its homepage.

Following the earthquake on Tuesday 22 February, the Earthquake Commission’s (EQC’s) primary focus is to respond to requests for emergency repairs to residential properties in Canterbury. EQC insurance covers emergency repairs around safety, weathertightness and habitability, i.e for damage to sewerage and water systems, holes in roofs and damaged chimneys etc. If you require emergency repairs, call EQC on 0800 DAMAGE (0800 326 243). Homeowners with general house insurance are automatically covered by EQC’s natural disaster insurance. You can find more information about what is covered here.

The claims lodgment process remains operational following the earthquake. Claims for damage to residential buildings, land and contents can be lodged by telephoning 0800 DAMAGE (0800 326 243) or online here. Claimants have up to 3 months from the date of the event to lodge a claim.

For more on procedural earthquake claim filing and cautions read Sept.18 earthquake insurance story by Amanda Morrall.