Relief packages for people affected by COVID-19
Many banks, including the four major banks, are allowing a pause in mortgage payments for up to six months*. It is important to note that whilst payments are deferred, your bank will be capitalising interest, which means that any unpaid interest will be added to the outstanding loan balance.
*Several banks announced in July that this pause can be extended beyond 6 months. Please check with your bank to determine if this option will be available to you, and the period of extension available.
It is extremely important that you are in contact with your lender where you are seeking relief from your repayments. Links to COVID-19 specific information from several banks are at listed below. If your bank is not listed then go to your bank's main webpage for further advice.
If your partner has placed a “hold” on a joint accountTOP
How do I lift a hold placed by my former partner on our joint account?
In order for a “hold” to be lifted from a joint bank account, both owners need to agree. If agreement cannot be reached then you may need a court order to settle the matter, or the hold on the account will be maintained until agreement can be reached.
Closing a bank accountTOP
Joint accounts normally require all signatories to authorise closure of the account. This may also take some time, as all debts against the account need to be paid first (e.g. credit card debts).
The general steps are:
- Both owners need to agree – if agreement cannot be reached, then you may need a court order to settle the matter, or simply maintain the hold on the account until agreement can be reached.
- Cancel all direct debits and credits – You have probably already done this for direct debits and credits over which you have control (before placing a hold on the account), but your (former) partner needs to do the same.
- Zero balance – Pay off any overdrawn amount and work out with your former partner how you will divide the remaining account balance. The balance must be zero before you can close the account.
- Call your bank – Tell them you would like to close the account. They will need to verify both owners' identities. Take note of the date and time you called, and the name of the customer service officer you spoke to.
- Put it in writing – Follow up your call with a letter confirming you want to close the account. Include your joint account details, both signatures, and details of your phone call. Ask for written confirmation that the account has been closed. Keep a copy of your letter in case there are any issues later.
- Confirmation – You should receive confirmation from your bank once the joint account has been closed. This could be a letter or a final statement. If it does not arrive, follow up with the bank.
More information in relation to joint accounts can be found at MoneySmart – Joint Accounts
More information in relation to cancelling credit cards can be found at MoneySmart – Credit Cards
Mortgages and Other Loans against jointly held assetsTOP
Can my former partner build up debts by using equity in our home or other joint assets after I leave?
In general if anything is changing on a joint loan or mortgage, or if any new lending is to be considered, your bank would need both you and your ex-partner to sign the appropriate documents and may also require a bank officer to witness the actual signing, so it would be difficult for one partner to do this without the other knowing and agreeing. Should your ex-partner alone fill out an application for a loan against a joint asset, the bank will normally still seek to interview you and witness your signature to avoid the possibility of a forged signature.
Should there be a situation where you are a co-signatory for an existing credit line with the bank (such as a credit card), then it may be possible to limit your personal liability by talking with the bank and describing your situation. Limited liability will only apply to commitments made by your ex-partner after the liability limit is put into place. Note that if you have placed a hold an a joint account which is linked to a credit card, that card will normally be on hold too.
If your mortgage has a line of credit (that allows extra money to be lent against the mortgage) or a redraw facility (which allows money that has already been paid to be redrawn) you need to change the terms of your mortgage to ensure that two signatures are required to draw down against the mortgage. Contact your bank, financial institution or mortgage broker to change the terms of your mortgage.
Once again, financial institution policies vary, so it is extremely important that you discuss this situation with your bank (or other lender) to determine exactly what they can do to help you.