Have you considered all your mortgage deferral options?
Is the current pandemic leaving you or your family in a difficult financial position?
Are you worried about keeping up with repayments?
Are you concerned about defaulting on your mortgage?
If you have answered ‘YES’ to any of the above, then read on.
The first thing to do is check whether you’re behind in your mortgage. This is very easy to do. Either contact your bank or simply log into your account via internet banking.
There are a few options in the event you are;
The most common option in the current climate is – Deferring your home loan repayments.
Under the mortgage deferral scheme, banks gave customers an option to pause their mortgage repayments for up to six months. Over 500,000 Australians opted for a mortgage repayment ‘holiday’ and, now as we are in recession, many homeowners are concerned about resuming their mortgage repayments while facing a drop in their pre-COVID income.
Keep in mind if you’re facing financial hardship, you could defer your mortgage repayments for a period of three to six months without falling into arrears. However, once the period is up, your repayments will revert back to normal.
The second option is to - Renegotiate your loan. This is where you may find the use of a mortgage brokering service to be of great value. For example, if your current loan term is 15-20 years, it could be extended to 20-25 years to spread out your repayments. Without doing the maths, clearly if the loan term is extended for longer than you’re going to be up for a greater amount of interest over the lifetime of the loan.
Another option could be to - Switch to an interest mortgage only loan. If you are on a principal and interest only loan you could negotiate with your bank to convert the loan to a more feasible option. The time period is usually one year and your loan will revert back to principal and interest once it has lapsed.
One of the downsides from taking a ‘holiday’ from your mortgage repayments is that you will still be charged interest, importantly, that interest will be added to your loan balance. Another thing to bear in mind, if you are not paying your mortgage for three or six months means that you’re extending the term of your loan, and therefore it may take you longer than planned to pay off your loan.
Other options include; Speaking to other billing providers to request some reprieve. Many of these services such as energy as internet are offering options for those in financial hardship. It’s also worth trying to renegotiate the terms or even better yet try to negotiate the penalty rates or interest rates on any other loans you have.
The most important piece of advice one can give during this challenging and unique time is not to panic. If you do find your situation not improving it is best to tackle it earlier rather than later.
Our team of experts at My Finance Agent are always available to discuss potential solutions to any financial hardship you may be faced with.
My Finance Agent can be contacted on 02 8313 8400.