How am I going to meet my mortgage repayments during the coronavirus pandemic?
With growing economic uncertainty as a result of the coronavirus, many of us may be wondering how we will meet our mortgage repayments should our incomes be affected.
The good news is there are avenues in place to minimise or even delay mortgage repayments, which provides a safety net should your income be disrupted.
We can also take comfort in the fact that if things become very challenging in Australia, the government and banks will need to band together to reduce mortgage pressure on Australians. We’ve already seen this play out in other parts of the world such as Italy, where they have put mortgage repayments on hold. Until this occurs, it makes sense to put your own plans in place to put you in the best possible position whatever should happen.
Here are five things you can do to minimise or delay your mortgage repayments.
Make sure you have the best rate possible
With record low interest rates, there’s a good chance that a better rate is up for grabs. Talk to your mortgage broker about refinancing your mortgage to ensure it is costing you as little as possible.
Reduce your repayment amount
To reduce your repayment amount, extend your loan term to 30 years and move to minimum repayments to reduce your monthly financial burden.
Consider an interest only loan
One way to reduce the monthly financial burden of your mortgage is to move to an interest only loan. Talk to your mortgage broker about whether this may be possible, even just for the short-term. As an added benefit, if the mortgage is for an investment property you can deduct the interest, making an interest only loan more desirable.
Request a mortgage repayment holiday
A mortgage repayment holiday is an approved period of time where you don’t need to pay your mortgage repayments due to financial hardship. This can ease the financial burden of the repayments when you need it most. Talk to your mortgage broker to see what may be possible.
Access a cash buffer
If you have equity in your property you may be able to gain access to a cash buffer. Equity is the market value of your property minus what you owe on your existing home loan. If you refinance your loan you may be able to access that equity. If your loan has a redraw facility you may be able to access any additional repayments you’ve made on your home loan that are over and above the minimum payments.
About Luke Heavey
Luke Heavey is a Senior Finance Consultant at Orium Finance. Hailing from New Zealand, Luke has over ten years of banking experience working for BNZ Commercial Banking. Since moving to Australia in 2011, he worked for NAB as a Business banker before becoming a Business Development Manager. He then progressed to specialising in Private Banking and banking accountants before joining Orium Finance. www.orium.com.au
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