Financial & difficulty hardship hub

This is also known as a mortgage holiday but don’t let the name fool you, this is no holiday. If you've been stood down, lost your job and cannot afford to pay mortgage repayments, you have the ability to enact a payment deferral. This is when a lender defers your repayments for a period of time.

Every lender has their own rules and requirements on these payment deferrals. It’s important to know that at some point you will be required to pay the interest that accrued while the loan was deferred. For example, some lenders will add the amount you owe to the end of your loan and some will charge immediately after the payment deferral is off hold.

Also, after the deferral, your balance and your repayments could be higher to make up for the interest accrued deferred repayments.

When a payment deferral on an existing mortgage is activated, it means that a lender will defer your required mortgage repayments for a specific period of time. Although your repayments are deferred, the interest on your loan is still calculated and added to the balance. In effect you're paying interest on interest.

So, when you recommence repayments your lender will recalculate your repayments so you repay the loan in the original term. This ultimately means your repayments will rise. However, there are options available to refinance after the payment deferral period, which could help to reduce repayments and increase the term of your loan, giving you a bit more flexibility.

First things first, while it’s important to understand what your options are in these difficult times, I urge you not to panic and spend hours on hold to your lender. Let’s look into your options first, I can help you navigate and understand what your options are during this time of financial hardship that many Australians are facing.

There are a number of reasons you might consider refinancing. These may include:

Lower rates

Interest rates regularly change, as is the case in the current market, so if you have a variable rate or your fixed rate is due to expire, you may be able to negotiate a lower rate with your lender - or find one that will.

More bells, better whistles

Not all home loans are packaged equal. It can be worth looking at features and functionalities to see what could be useful for you. If you aren’t using features with your existing loan, switching to a more basic loan could potentially save you in fees.

Debt consolidation

If you have multiple debts, such as a personal loan, credit card or car loan, you may be able to roll them into your home loan. This consolidates your debt to one repayment and could save you in interest. We will consider the whole picture to determining if debt consolidation is right for you.

Free up money

Whether you need to free up money for a renovation, a new car or have another project in mind, if you have grown equity in your home, you may be able to refinance to access more money to fund it.

A common question I get asked is whether to refinance or if a payment deferral is the way to go. There are a few different options which all depend on your current situation and financial needs. I can help answer any questions you may have around this to see what the right option is for you.

There is no easy answer to this question, as it depends on your situation and your financial goals. Let’s take a look at the pros and cons of fixing your rate:

Pros: Fixed rates prevent the risk of your repayments increasing due to a rise in interest rates and your repayments will stay the same for a set period.

Cons: Fixed rates are usually higher than variable rates, but now as rates are continuing to decrease, there could be associated fees and costs for breaking your fixed rate if you chose to refinance.

Some lenders’ turnaround times are still very good and sit at about 2 days between lodgement and decision. Other lenders’ turnarounds have blown out and are now measured in weeks. However for those lenders, the increase has more to do with losing capacity and capabilities in offshore teams to do documentation than the availability of money.

I have up to date turnarounds for all 62 lenders on the Loan Market panel so I can share those with you as we discuss what your options are for your current situation.

Your tenants may be going through some financial hardship at the moment and may not be able to afford paying their rent, I can help:

• Negotiate payment deferral options for your mortgage
• Discuss hardship options
• Refinance or reprice to get a more competitive rate
• Outline the costs of switching and not switching