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An Update on Lending Options – COVID-19

August 7, 2020  |  #Finance

With a second wave of COVID-19 upon us and uncertainty around government benefits such as JobKeeper, the financial pressure on both businesses and individuals may have you questioning your lending options and how you can ride out these times of uncertainty.

Our lending team here at Invest Blue have been able to help our clients navigate their refinancing and loan deferral options throughout this period. They join us in this piece to provide an update on current lending options available answer some of the common questions we have been receiving from clients.

 

Lending Options to Consider

 

Loan Deferral

In response to the pandemic impacting Australia in March, many banks announced home loans could be deferred for up to 6 months with no principal or interest payable during this period. With the extension of government benefits like JobSeeker, many banks have also extended the loan freeze period for an additional 4 months.

This means those who have been financially impacted by the pandemic and have already chosen to pause home loan repayments may do so for an additional 4 months.

It is important to note the following:

  • Interest owed during this period will continue to accrue onto your loan meaning you will have a larger loan size than when you initially froze your loan.
  • Loan extension for the additional 4 months does not automatically apply, and you will need to discuss with your lender to find out if you are eligible
  • Options such as moving your loan to interest-only may be more suitable based on your circumstances

You can read more on how to reduce your home loan during COVID-19 here.

 

Consolidating debts

If eligible you may want to consider consolidating your debts into one loan. You may find this reduces overall repayments and you may be able to find a lower interest rate during this period. It is important to consider the length of the new loan and ensure you are still prioritising reducing this loan to the best of your ability.

You can read our full article on “Is debt consolidation a good idea here”.

 

Frequently asked questions

 

Will pausing my home loan repayments impact my credit rating?

The general feedback is that the lenders will not look negatively on any clients that have taken this option. Also, it should not show up on the credit report for the client as missed payments. Most credit reports show a loan facility and the payment history month by month. It will not show in the months of the pause as a missed repayment, it may simply show as not reported.

 

How will I know how much my mortgage will increase by after this period?

Each lender will vary, you may find the length of your loan increases or your regular repayments depending on the set up of your loan and conditions of the loan. It is best to discuss this with your lender before proceeding so you understand how this will affect your future.

 

During this period, it’s important to understand the full range of options and benefits available to you so can make an informed decision around your finances. Our lending team are happy to assist you to navigate your options and ensure your loan is most suitable to you during this period. They will also help you understand your loan deferral options and discuss whether or not this is a good option for you.

 

Geoff Murray portrait

Geoff Murray

Lending Manager

Geoff has always had a strong interest in real estate so mortgage broking seemed like a great opportunity to learn more and be involved in the industry. He has successfully owned and operated his own mortgage broking business and now brings his valuable knowledge and experience to the Invest Blue team.

 

Carol O'Shae profile

Carol O’ Shea                                          

Credit Adviser                                                      

Carol has been working in the financial services industry for the last 16 years with roles based both in her native Ireland and also Australia. She began her career working in the banking and mortgage industry back home before moving permanently to Australia about 9 years ago. Carol has completed her Certificate 4 in Mortgage Broking.

 

Learn more about our Lending Team here.

 

If you’re serious about taking your finances to the next level speak with one of our advisers to find out how we can help you reach your goals and dreams!

 

What you need to know

This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.