- In general, lenders have expressed their desire to help those affected by the Coronavirus.
- Overall, lenders are generally offering 3 months of repayment holidays, which they will review after the first 3 months, upon which potential extensions for a further 3 months will be granted if required. This is the 6 months PLAN period – it is just that, a plan – any further extensions past the 6-month period will likely be based upon the outcomes of Coronavirus in this country.
- NB: Please be aware that lenders are providing the repayment holiday on the basis that interest and fees are still accumulating and at the end of the holiday when the situation returns to normal, your repayments will be adjusted. The repayments will almost certainly increase to cover the repayment of the loan balance, including the accrued interest and fees over the same remaining loan term, it is not an extension to the loan term.
- Therefore, please consider carefully: If you have available redraw or funds available in offset, and your situation allows you to continue to make your loan repayments, you will continue to save interest, paying down more principle sooner. This will in turn reduce your overall loan term.
- Following the RBA cutting rates twice in March 2020, it is quite probable that the mortgage rates for existing loans are not competitive. Factored into this is the ‘Grandfathering’ effect (ask Neil about this). Helping clients switch to lower rates where appropriate will result in smaller repayments and higher interest savings, thus suitably equipping home owners to overcome possible financial distress.
- Recent RBA statements indicate that the government will wait and see how current rates and stimulus packages propel a recovery before taking any further measures. This implies that rates may stay at their current levels for a few years until the economy starts recovering. As a result, now maybe the time to discuss your situation and the appropriateness of a fixed rate.
NB: Before considering any changes to a loan structure or facility including the repayment holiday, refinancing and fixed rates as mentioned above, personal circumstances need to be considered for eligibility and appropriateness to each individual’s situation. Unfortunately, not every applicant will be eligible or in the right position to make changes.
Contact Neil on 0412004020 to discuss your personal situation.
Neil is an Authorised Credit Representatives of VOW Financial Pty Ltd, Australian Credit Licence 390261 and a full member of the industry’s leading governing body MFAA (Mortgage and Finance Association of Australia).