There’s no doubt that the impact of COVID-19 has challenged all of us.
The good news is that there are a number of options available that can provide you with some financial assistance during this uncertain time.
In this blog, we unpack the support that both lenders and mortgage brokers are offering which may help stabilise your financial position.
HOW LENDERS CAN HELP
Switch to an interest-only
Many lenders are providing the option to switch to an interest-only loan. Opting for interest-only provides immediate financial relief to your cash flow as it reduces repayments to the minimum amount.
Repaying a minimum monthly loan amount won’t reduce your principal loan. As the complexity of loan terms varies for this particular option from lender-to-lender, we recommend checking directly with your bank for the full details of how switching to
interest-only will impact you.
Defer your loan repayments
Some lenders are allowing customers to defer loan repayments for 3 to 6 months. This option means that repayments are essentially paused in the interim, with interest capitalised onto the loan once payments resume. In most cases, the lender
will also recalculate the loan term to make up for this deferred period.
Other options to explore
By discussing your position with your lender, other options may be offered to you such as waiving fees or fixing the interest rate on your loan. Some small businesses may also be able to access government-assisted loans to help support cash flow.
Accessing any of these options directly with your lender under financial hardship applications would usually result in a negative credit rating being applied to your file.
However, during this time most applicants will be exempt from this negative credit rating, which is an additional incentive for customers to seek financial relief.
HOW MORTGAGE BROKERS CAN HELP
Refinance your loan
Despite the changes in lifestyle due to the global pandemic, refinancing remains an attractive option as the mortgage market continues to be extremely competitive.
The qualified brokers at Together Financial Services have access to more than 30 lenders and can secure interest rates in some cases as low as 2.19%.
Refinancing your existing loan is likely to reduce your repayments, save money and increase your cash flow, as long as you haven’t already refinanced in the past 12 months.
Access your equity
A new property valuation may be the key to accessing your equity. Tapping into your loan’s reserves during these times can be comforting for those who want to keep a stash of cash for peace of mind. While this option will increase your repayments, you will also have the opportunity to refinance your loan and the interest may not increase by as much as you would expect.
Consolidate your debt
If you have credit cards or a car loan, it’s wise to roll these repayments into the one loan to help save on interest and improve your position. Loan terms are crucial when it comes to consolidating debt, so it’s vital that you use an experienced mortgage broker to ensure it’s the best option for you in the long-term.
Keep in mind that whichever option you pursue, you will need to undergo a bank assessment, so seek financial advice before making your move.
To explore these processes and loan terms in greater detail, please contact your lender or speak to a Together Financial Service’s mortgage broker by calling us on 03 8761 9024 or completing our short online form.