Repayment Holidays are Ending: What it Means for You
In March 2020, the COVID-19 pandemic and its necessary lockdown periods meant that lenders needed to offer pauses on their mortgages to assist the many Australians that had lost their job or had their income reduced. These hold on mortgage repayments were granted for roughly 6 months, with some institutions offering an additional 4-month extension. With the Australian economy on the recovery, the pause on mortgage repayments due to COVID-19 is ceasing. Here’s a list of everything you need to know about repayment holidays ending:
What Date Are Repayment Holidays Ending?
It is generally considered that repayment holidays are ending on March 31st, but this may differ between institutions. The Australian Securities and Investment Commission (ASIC) has advised financial institutions that they need to give their customers ample warning and make reasonable efforts to notify their customers about their repayment holiday expiring. If you have not received any correspondence, get in touch with your financial institution or mortgage broker as soon as possible!
Can I Apply for Another Extension?
Once again, this differs between financial institutions. In general, banks may be hesitant to offer another repayment holiday extension on top of an already existing extension and instead might opt to look at different ways to structure the mortgage.
Repayment Holidays are a Double-Edged Sword
Whilst repayment holidays may be helpful in the short-term, they increase the overall cost of the loan due to the interest-only repayments. You would pay roughly $6,500 more on a 30 year $400,000 loan with 3.5% interest if a six-month mortgage pause was taken compared to if it wasn’t. You should look to return to a stable financial position and repay mortgage repayments as quickly as possible, you can’t holiday forever.
What Can I Do Financially Before My Repayment Holiday Ends?
Not a whole lot. If you are unable to make repayments on one of your financial loans, it is highly unlikely that another financial institution will deem you acceptable for another loan, whether that be for an investment property or any other investment activity. It is generally considered that taking a repayment holiday will impede financial support from banks for up to 3 months of when you have started paying repayments back.
How Can I Recieve Support When My Repayment Holiday Ends?
If the pause on your repayments has ended and you are still in need of support, the next step would be to get in contact with your financial institution or mortgage broker about options available to you. One way to best receive this support is to demonstrate financial hardship through prioritising spending on mortgage repayments rather than non-essential expenses. If a bank sees that you are spending $1,500 a month on expensive clothes, electronics or going out instead of mortgage repayments, they may be less willing to provide financial help.
How Vision Can Help
Financial institutions can be stubborn when it comes to repayment holiday assistance with their products. An award-winning and expert mortgage broker like Vision can assist in refinancing existing deals with large banks and lenders or looking at better options for YOU on the market. What’s even better is that the banks cover our fees, not you.
Vision wants to ensure that people understand the mortgage options that are available to them, something that a large bank cannot do. We are offering a free consultation with a mortgage expert to help get your mortgage in order. Book in using the button below, or give us a call at 02 4014 1999