We provide answers to a number of frequently asked questions below. We will continue to add new questions and update our answers as events and government announcements unfold.Questions about pausing loan repaymentsHow does the loan repayment pause work?Banks are offering customers the ability to pause residential loan repayments for up to 6 months if they have been impacted financially by coronavirus. I provided links to each lender’s relevant webpage at the bottom of this blog post.It is important to note that banks are not offering an interest-free period. Interest in respect to your loan will continue to accrue and be added onto your loan balance.For example, if your interest only loan is $100,000 and your interest rate is 3% p.a. then your monthly interest bill is $250. If you request the bank to pause repayments for 6 months then at the end of this period, your loan balance will be $101,500 (being the original balance plus 6 monthly payments of $250).Most lenders have confirmed that they will not charge interest on the unpaid interest amount (e.g. the $250 per month) during the loan repayment pause period.Should I pause my loan repayments?If you are unable to continue to make your loan repayments on time due to financial hardship, then pausing your loan repayments is a good solution.However, if you do have alternative means of making repayments e.g. from cash savings, redraw, etc. then my advice would be to utilise those other mechanisms first, before you pause your loan repayments.Should I pause my repayments if I’m concerned about losing your job in the future?No. If your income has not yet been impacted by the coronavirus then our advice would be to continue making normal loan repayments. If your financial situation is adversely impacted in the future, then you may consider pausing repayments at that time. We anticipate that lenders will allow borrowers to do this at any time over the next six months.Will pausing repayments affect my credit rating?No. The Australian Banking Association has confirmed that borrowers that take advantage of the repayment pause option will have any impact on their credit rating – see here.Should I pause repayments on all loans?If you have suffered financial hardship, our advice is typically to put investment loan repayments on pause first and attempt to continue to make normal repayments towards your (non-tax-deductible) home loan, if possible. However, if you are not in a position to continue making home loan repayments, then pausing all loans might be your only option.Will the accumulated unpaid interest still be tax deductible?If you put an investment loan’s repayments on pause, the interest will be added to the loan’s balance at the end of the pause period. Therefore, when normal repayments recommence, the bank will charge interest on this higher loan balance (so more interest will be payable). This should not have any adverse impact on your tax deductions. That is, all interest charged in respect to this investment loan will continue to be fully tax deductible.Also, you will be able to claim a tax deduction for the interest incurred (and subsequently added to the loan’s balance) during the loan repayment pause period.Can I reduce principal and interest (P&I) repayments to interest only?Normally, changing repayments from P&I to interest only would require a lender to re-contract the loan and that would normally trigger the full loan assessment process. However, we understand that some lenders are working on their ability to do this without requiring the borrower to submit a full application. We will update this page if any new information comes to hand.Landlords and tenantsHow does the ban on evictions work?Government has enforced a 6-month moratorium on evictions of commercial and residential tenants who are unable to meet their commitments due to the impact of the coronavirus.Therefore, if your tenant is unable to pay their rent due to coronavirus, you cannot evict them for at least 6 months.What should I do if you tenant says they cannot pay their rent?The first step is to ascertain to what extend the tenant’s financial position has been impacted by coronavirus. This might include obtaining documentation from the tenant’s employer/s or accountant (if they are self-employed) to confirm any changes to their income levels.This information will help inform your response. Essentially, you need to form a view on two matters:§ To what extent the coronavirus situation has reduced the tenant’s income; and§ The likelihood of the tenant recovering their income once the shutdown restrictions have been lifted. This includes how long that recovery period might take.Once you have all the information, what agreement should you make with the tenant?The government released its Code of Conduct in respect to commercial tenancies on 7 April 2020 (see here). Whilst this Code does not apply to residential tenancies, it perhaps provides some hints for residential landlords.The Code talks about the concept of proportionality. So, if a tenant’s income has fallen by 50%, then landlords are expected to agree to a rent reduction of 50%.The Code also states that rent reductions can be offered in the form of (1) waivers and (2) deferrals. At least 50% of the total rent reduction must be in the form of a waiver. Landlord must offer a commercial tenant a period of at least 2 years to repay any deferred rent.Can you provide an example of what a residential tenant agreement might look like?Example: Tenants have been temporality stood down by their employer but expect to return to full employment when the when shutdown restrictions are lifted. The tenants were paying you $300 per week in rent.You agree with the tenant to reduce the rent to nil for 3 months (saving the tenant $3,600). Half of this reduction is a waiver i.e. you do not seek to recover it. The remaining half is a deferral. As such, you ask the tenant to sign a new 1-year tenancy agreement which commences at the end of the rent reduction period at a rate of $335 per week (being the original $300 plus 50% of $3,500 over 52 weeks).I have used the abovementioned Code as a basis for framing this agreement with the tenant. However, it is important to note that the government has not yet indicated what it expects residential landlords to offer their tenants. Therefore, our advice is to hold off on making any agreement with the tenant until the government provide further guidance (we will update this page when that happens).What if my tenant cannot pay any rent for 6 months and then leaves?Unfortunately, there is not much you can do. You may be able to claim against the tenant’s bond. You also may be able to claim on your landlord insurance policy (see more below).And finally, I expect that the government may come out with a package to compensate landlords that have suffered financial loss as a result of its moratorium on evictions. Watch this space.Will landlord insurance cover me for loss of rent?The answer to this question will depend on the term of your cover so you should consult the insurance company and/or read its Product Disclosure Statement (normally found on its website).Many insurance providers have ceased issuing new policies due to coronavirus.Most policies exclude your ability to successfully claim if you have agreed to a tenant paying a lower or no rent. Therefore, this cover is unlikely to be of any benefit during the coronavirus period.Do you have any other questions?If you have any questions that are not covered above, you can email us. If we feel that it is likely other people would benefit from the answer, we will post your question and answer here.