Many businesses and services have been forced to close and many locals are already feeling the pinch when it comes to finances - especially those with a mortgage.
Ann Paterson Real Estate has put together a summary of the assistance now available to mortgage holders. The following information applies to both owner-occupiers and investors.
Will mortgages be put on hold?
The big four banks have all announced that customers can pause mortgage repayments if they fall ill with Coronavirus or suffer financial hardship through job loss, a significant income reduction or non-payment of rent by tenants. However, other lenders are only giving this relief to customers who fall ill with Coronavirus. Either way, you will have to provide evidence of your change in circumstances.
Help for those already impacted
Most banks are willing to consider changes to your current lending arrangements if you have been impacted by the economic consequences of the Coronavirus pandemic. To qualify, you need to either:
Have been diagnosed with Covid-19
Have lost your employment or taken a significant cut in income
The rent on your investment property is not being paid
In these circumstances, banks are offering the following options:
Allowing up to six months' deferred repayment on your loan. During this period, interest will still be charged and accrued. This will not affect your credit score
Extending your loan term so that your repayments remain the same upon recommencement. Alternatively, you can pay the backlog during the existing term through higher repayments
Whilst deferring repayments can provide welcome breathing space, property owners should consider the cost. All of the big banks have announced interest capitalisation, which means the interest that you don't pay during your period of deferral is added to your outstanding loan balance.
For example, if you have a $400,000 home loan at an interest rate of 3%, you would be paying $1,000 per month in interest. If you pause your repayments for six months, the interest amount is added to your outstanding balance and in six months' time, you will have a $406,000 loan.
What about new loans?
Banks are still willing to lend money for new purchases and refinances. Some restrictions might apply to borrowers working in hard-hit industries, such as travel and tourism.
At Ann Paterson Real Estate, we encourage our landlords and tenants to contact us if they are experiencing financial difficulty meeting their rental or mortgage obligations. Our expert property managers are fully up-to-date and would love to assist you through this difficult time.
If you are thinking of selling, the Ann Paterson team stands ready to assist you. There is no need for you to accept a lesser price than your home is worth during the Coronavirus crisis. The property market has not shut down, we are just doing things differently with virtual inspections and live-streamed auctions.
For a confidential chat with one of our sales specialists, please contact Ann Paterson Real Estate today.