The government, Reserve Bank and retail banks announced last week that lenders would offer their customers a six month break from repayments due to the escalating virus outbreak.
Owner-occupiers, investors and business owners are able to take a repayment holiday on principal and interest payments.
ANZ, BNZ, ASB, Kiwibank and Westpac are creating online application forms to process mortgage holidays. The banks are at different stages, but application forms are expected to be up and running by the end of the week.
ANZ has launched its online form, and will start contacting applicants this afternoon.
Banks are expected to offer customers three month or six month mortgage holidays. Kiwibank says customers can choose a shorter break, or cancel their payment holiday, if their circumstances change.
Westpac is currently processing payment holidays through its contact centre. It will launch an e-application form this week.
Gina Dellabarca, Westpac NZ's general manager of consumer banking and wealth, requested that customers call their contact centre or mortgage broker for advice, until the form goes live.
"Our team in our contact centre is able to explain to customers how a repayment deferral works, what it will mean for their loan, and the suite of other assistance options we have available. Customers who have made extra payments on their loan previously may now find themselves in a position where they can reduce the amount they are paying instead of taking up the deferral option," Dellbarca said.
While mortgage holidays will appeal to customers in dire financial circumstances, experts have warned borrowers interest will still accrue over the repayment holiday term.
Roger Beaumont, chief executive of the New Zealand Bankers' Association, said: "While there are obvious advantages for people in need, repayment deferrals may extend the time it takes to repay the loan and will add interest cost. So it may not be for everyone. It’s important to know that interest on these loans will still accrue, and deferred interest will be added to the principal amount of the loan."