How can you manage your home loan payments during the Coronavirus crisis?
Notwithstanding the current Coronavirus, bank offer various options to help you manage your home loans during the times of crisis. The banks can freeze/ reduce your repayments during a “life event”. The bank defines a life event to include job loss, divorce, death and illness in the family. This Coronavirus crisis would fall under “life event”.
Here are the options you can discuss with your bank to manage your cashflow during this crisis (which we believe will take 3-6 months):
Temporary mortgage payment suspension through hardship variation. If you will not be able to pay your regular repayments due to this crisis, you need to apply to your lender for a hardship variation. The only thing you need to keep in mind is that while the home loan repayment freeze is in effect, interest will continue to calculate on your loan.
Temporary mortgage payment reduction. If you are still in employment but on reduced wages, you can apply for a temporary mortgage payment reduction. Your lender may ask you to provide an amount of money you think you can comfortably repay without putting you into financial hardship.
Temporary mortgage payment suspension using your redraw facility. If you have a redraw, facility and have extra cash in the redraw, you can request a temporary mortgage payment suspension. Rather than withdraw the mortgage payments, you may be able to use the redraw to substitute making repayments.
Switch payments to interest only. If you are currently paying principal and interest payments, you might be able to temporarily switch to interest only payments. This will reduce your repayments and improve your cash flow. Keep in mind you loan balance will stay the same while you’re on interest only
Refinance your mortgage. Depending on your current situation and the equity of your home, you might be able to refinance your mortgage to access extra cash. The extra cash could help you / your business manage this crisis the next 3-6 months.
Call (02 9221 7977)/ email Wendy (wendy@moneyintelligence.com.au) in our office to find out more and discuss how we can help you manage your finances in this difficult time.
Together we can get through this crisis.