As we near the end of week one of lockdown the reality of this situation is starting to kick in for most.
There is no ‘one size fits all’ in any climate and is this is no different. The team at Tony Mounce Mortgages and Insurance would love to chat with you and assist with easing the financial uncertainty that is being felt at this time.
We are in the position where we have a direct line to your bank at a time where they are under enormous pressure trying to service all of their clients.
We now have some details around the COVID-19 packages the Banks have issued. The majority have finalised their offering while a couple are yet to finalise. As you would expect the various Bank offerings are similar and I wanted to cover over some of the key elements we are seeing across the board.
- Minimum Repayments; If you have been paying off your loan faster than you needed to, you might be eligible to pull back your repayments to the minimum. Alternatively you may be able to extend the term back out to the maximum allowable – which will also reduce your loan payments.
- Interest only; The ability of switching to Interest only, the period being offered is up to six months. This will extend the term of your loan by the period you are on interest only.
- Mortgage repayment deferral; This is sometimes referred to as a mortgage “holiday”. Your loan will essentially increase while you are not making interest payments. The interest will continue to accrue and be added to the loan balance.
For example, if you have a $500,000 loan at 4% this loan will now be $510,000 after 6 months and your loan term will extend.
While not an option we would suggest lightly, we appreciate that this will be the only option for some.
The great news is these changes can be made immediately even if you are on a fixed rate. The changes can also be undone sooner if your circumstance change for the better.
The test is easy for this – “has/will your income be reduced due to COVID-19?” If the answer is yes, you should talk to us.
The team at Tony Mounce Mortgages and Insurance are here to help and crunch the numbers with you. The Banks also have other options available for use including interest free overdrafts of which we are now very familiar.