In These Covid-19 Times Of Uncertainty
Information that all mortgage holders should be aware of in these swiftly changing times:
First of all, everyone on a variable home loan should be checking their interest rate and if it is above the current market interest rate offerings, you should be contacting your Bank for a review of that rate. This call is managed by the Banks Retention Team section, and it doesn’t require any paperwork or payslips. It helps if you can say that you know Bank XYZ is offering x.xx%. If you are successful with receiving a discount on your interest rate, please request that the rate be applied to your current loan repayments. Some Banks give you a rate discount, but they leave your repayments at the previous higher level.
Secondly, all Banks are offering a 6 month defer of loan repayments, on both fixed and variable loans. Please consider applying for this repayment concession, don’t wait until you get behind on the electricity/car loan/credit card etc before you apply. It’s very simple, just log onto the Bank website and complete the application form and submit. Depending on the Bank, the defer period may be a block of 6 months, or it can be 3 months, with a review, and then if still needed, another 3 months. You don’t have to be unemployed to apply; you may be in an industry that has been impacted by the Covid-19 issue, and you’re not sure if you will drop hours or overtime in the coming months.
If you apply for the 6 month defer of your loan repayments, the Interest will still accrue onto the loan amount, even though that payment is deferred, but the Principal will be extended by adding a couple of extra years onto your loan term. If you can still pay something onto the loan during the 6 months it will help reduce the interest that is being added onto the loan in the background.
Finally, this process will not impact on your Credit History record, and you will not be deemed to be in arrears on your loan repayments. If your incomes have been, or may be, impacted due to the Covid-19 fall out, please consider your options, especially self-employed people.
Regardless, everyone should be checking their variable interest rates and chasing their Banks up if they are not favourable, and I have no doubt that will be a lot of you!!
By Judith Kohler (Aussie Mortgage Broker)