Many lenders have been quick in their response to the Coronavirus Pandemic, with specific hardship support policies in place to assist borrowers through these uncertain times.
Most lenders are offering hardship support in varying ways, with the most common being a three to six month ‘pause’, or repayment deferral, to home loan customers who meet certain criteria. Typically interest and fees will still accrue during this period, with capitalised interest and fees due to be repaid via increased monthly repayments after the hardship period has finished.
Each lender has specific eligibility criteria to determine if Coronavirus hardship support is available to you based on your current circumstances. This may include providing evidence of lost jobs or income sources, and family or individual income and asset tests. Ensure that you have some sort of evidence to supply to your lender to support your case.
For those who aren’t currently experiencing hardship but are sensibly looking to take extra precautions, the following are some ideas to consider:
- Check the current interest rate on your home loan. Rates are historically low, but not all Lenders have passed on the entirety of these cuts so you could be paying too much. Have your broker compare your current loan to what is currently available in the wider market and negotiate with your current lender on your behalf. In some cases the Lender will offer an immediate reduction in your interest rate.
- Refinance to a lower rate home loan. In an uncertain environment you should explore your options to save money sooner rather than later. Speak to your broker to see if they can reduce your monthly repayments.
- Pay extra into your home loan either directly, or into your offset account, if you have one. Paying extra into your home loan now will create buffers and an emergency fund to better prepare you for any financial hardship you might experience later if you were to become ill or lose your job. These extra payments will also have the added benefit of saving you some of the interest charges on your loan.
- Consider switching your loan to interest only for a period of time. Whilst this will cost you more in the long-term, this could offer you some breathing room for a period of time to free up some cash flow. It is best to seek the advice of your broker regarding this, as you should be aware of the long-term cost that this may cause you.
The best thing you can do right now is to speak through your concerns with your broker. Each Lender’s policy is different, with different criteria to determine eligibility. To properly understand the jargon and requirements, speak with your broker, who can identify the appropriate options available to you during these tough and uncertain times.
We are here to help with all aspects of your loans, and we are here to help when life is financially difficult. So call us, email us, message us on our socials, because we are here to help you get through this.