COVID-19 Lending Guide
During this difficult and unprecedented time, you may be faced with some financial uncertainty. As such, we wanted to reach out to provide some resources and support regarding your finances which may help if you have been adversely affected by Covid-19. We have also provided some options for those clients who have not been impacted by Coronavirus, but still want to reduce their monthly costs.
As you may be aware, the majority of lenders have provided relief packages in conjunction with the Federal Government. More guidance on the stimulus packages can be found here. Contacting us or your lender directly should be your first step if you’re struggling to make your repayments due to unforeseen circumstances.
Currently, lenders are offering a deferral of home loan repayments for up to six months (with interest capitalised), as well as reduced fixed rates for owner occupiers paying principal & interest repayments, with some as low as 2.19%.
Note that if your income has been affected by Covid-19, consider using the loan repayment deferment as your last choice if possible. If you choose this option, the loan repayments are not required to be paid for up to 6 months, however the interest will be capitalised to your loan. This means that after the 6-month period, you will owe more than the loan balance you started at before you deferred. It is also worth noting that the Covid-19 assistance is not automatic, and your lender will ask a few questions to understand your situation and assess your eligibility.
Example: If you have a $400,000 loan at an interest rate of 3%, and choose to defer, after the 6-month deferment period, you will owe $406,000. The banks have agreed to extend the deferred loans for a further 6 months, however before choosing to defer you may want to consider some other options:
- Access your redraw and/or offset funds to assist with loan repayments.
- If paying more than minimum repayment amount, reduce your repayments to the minimum required
- Change your repayments to Interest only. Remember – if you choose this option, your repayments may be higher when the loan is converted back to principal & interest repayments as the overall loan term has reduced.
- Seek a pricing discount from your existing lender to reduce repayments.
- A deferral of business loan repayments, including equipment/vehicle finance, for up to six months with interest capitalised for business loans now up to $10 million.
- Reduced rates on Overdraft facilities and some business loans
- Merchant terminal rental fee waivers
- Deferred payments for business credit cards for up to three months
- Fee-free redraws for those business loans with redraw available
- Unsecured $250,000.00 business loan 50% guaranteed by the Federal Government
- For the first six months, all repayments are deferred.
- For the remaining term of the loan, amortising principal and interest repayments will be applicable.
- No establishment or account fees.
- Performing a health check on your loans and submitting a pricing request to reduce rates with your existing lenders if required;
- Re-financing your loans, should your existing lender not want to meet market rates. For those in a position to re-finance, there are some very low rates on offer for fixed and variable rate options, plus some lenders offering up to $4,000 to refinance; and/or
- Restructuring and consolidating your loans, should this be beneficial.
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