Pause Home Loan Repayments? Control Your Finances (2026)

In today's uncertain economic climate, many Australian homeowners are feeling the squeeze on their finances. With interest rates fluctuating and the cost of living on the rise, it's not uncommon for borrowers to find themselves wondering, "Can I pause my home loan repayments?" Whether due to temporary financial hardship or strategic planning, pausing home loan repayments can provide much-needed breathing room. But how exactly does it work, and is it the right choice for you?

Understanding Pausing Home Loan Repayments

Pausing home loan repayments, often referred to as a 'repayment holiday,' is an arrangement you can make with your lender to temporarily halt or reduce your mortgage payments. This option can be a lifesaver during periods of hardship, such as job loss, illness, or other unexpected financial challenges.

During a repayment holiday, you may be allowed to stop payments entirely or pay a reduced amount for a set period. It's important to note that interest will continue to accrue on your loan balance, which can extend the life of your loan and increase the total interest paid over time.

Current Market Information: Rates and Requirements

In 2026, the Australian mortgage market remains highly competitive, with interest rates ranging from 6.49% to 12% depending on the lender and your financial situation. Each lender will have specific criteria for granting a repayment pause, but common requirements include demonstrating financial hardship and having a good repayment history.

Here's a comparison of typical features among different lenders:

At Esteb and Co, we work with a panel of over 83 lenders, increasing your chances of finding a suitable option tailored to your needs.

Steps to Pause Your Home Loan Repayments

Pausing your home loan repayments involves several steps. Here's how to navigate the process:

1. Assess Your Situation: Determine whether pausing repayments is necessary and feasible for your financial situation.
2. Contact Your Lender: Reach out to your lender to discuss your circumstances. Be prepared to provide documentation of your financial hardship.
3. Understand the Terms: Ensure you comprehensively understand the impact of the repayment pause, including how interest will accrue.
4. Formalise the Agreement: Once terms are agreed upon, ensure you receive a written confirmation of the new arrangement.
5. Plan for Resumption: Use the pause to stabilise your finances and plan for the resumption of normal payments.

Tips and Considerations

Here are some expert tips to consider when thinking about pausing your home loan repayments:

• Explore Alternatives: Before opting for a repayment holiday, consider other options such as refinancing or switching to interest-only payments.
• Evaluate the Long-Term Impact: Understand how a pause will affect the overall cost of your loan and your long-term financial goals.
• Communicate Proactively: Maintain open communication with your lender to ensure mutual understanding and flexibility.
• Seek Professional Advice: Consult with a mortgage broker, like those at Esteb and Co, to explore the best options across our extensive lender panel.

Frequently Asked Questions

Here are some common questions borrowers have about pausing home loan repayments:

1. Can I pause my home loan repayments indefinitely?
   No, repayment pauses are typically temporary and subject to lender approval, often for periods ranging from 3 to 12 months.
2. Will pausing my repayments affect my credit score?
   Generally, if arranged formally with your lender, a repayment pause should not negatively impact your credit score.
3. Do all lenders offer repayment pauses?
   No, not all lenders offer this option, and terms can vary significantly. It's important to check with your specific lender.
4. Will interest still accrue during the pause?
   Yes, interest will continue to accrue on your outstanding loan balance during the repayment holiday.
5. How do I apply for a repayment pause?
   Contact your lender directly to discuss your situation and follow their application process.
6. What documentation will I need to provide?
   You will need to demonstrate financial hardship, often through payslips, bank statements, or other financial documents.
7. Can I pay a reduced amount instead of pausing completely?
   Yes, some lenders may offer the option to make reduced payments rather than a full pause.