Covid-19 is having an ever-changing impact on many things for all of us, with travel and movement restrictions, self-isolation, business shut downs and job losses at an early stage in Australia.
The Government has been quick to act with support measures for many of those affected to reduce the impact, however there remains an understandable level of fear and misinformation floating around.
We have prepared the below summary to help you understand some of the issues being discussed and considered in regards to lending in Australia to help those affected.
It is essential to start with the clear and indisputable fact that if you haven’t been impacted through job loss, loss of rent or severe economic hardship then no actions will be available to you. There will be a requirement to provide evidence of the change in circumstances, so please understand that you can’t simply try and seek change under the hardship provisions unless you can indeed show clear evidence that something has occurred.
It is nice to know that these safeguards are in place if something happens to you, but please do not try and exploit the situation if it doesn’t.
FOR THOSE THAT HAVE BEEN ALREADY IMPACTED
Most banks are now willing to consider changes to your current lending if you have indeed been adversely impacted by the economic consequences of Covid-19.
To qualify, you will need to either:
- Have been diagnosed with Covid-19;
- Lost your employment or income significantly reduced; or
- Your rent on your investment property is not being paid.
In these cases, banks are willing to:
- Allow up to 6 months deferred repayment on your loans to assist your cash flow, but during this period interest will still be charged and accrued.
- The loan term will either be extended for that period or you can pay the backlog during the existing term through a higher repayment once it recommences.
- Taking a deferred mortgage repayment will not affect your credit rating.
FOR THOSE NOT IMPACTED
If you have not been directly affected by Covid-19, then the banks are still assessing their options on existing clients, including whether or not to pass on the recent official interest rate cuts for investor loans.
There are some special fixed rates now available for Owner Occupiers where they have passed on the recent reductions by up to 0.7%pa.
We do expect some further announcements shortly and will keep you posted.
The banks are currently offering higher discounts on variable interest rates, so if you haven’t had your loan reviewed recently, please contact us to ensure you are getting the best discount on your lending.
Despite the current environment, Banks are still willing to lend for new purchases and refinances.
Some restrictions may apply to employment in certain industries directly impacted by Covid-19 such as travel and tourism.
We would be pleased to help you further evaluate your options and assist in ensuring that you are achieving the best result for your circumstances. Simply email us at email@example.com to connect with one of our professional team members near you.