How uno can help
There may be better strategies and options you can take rather than defer your mortgage payments. Our team of expert brokers are here to help and are available to discuss the right option for you.
If you have made extra repayments in the lead up to the crisis, your home loan might have a redraw facility which you can use to meet your mortgage payments
Going back to your existing lender and trying to negotiate a cheaper rate
There is also the option of refinancing your home loan with another lender offering a cheaper rate
Check your loanScore
You may be able to refinance and get a better rate, so think of loanScore as a free check-up for your home loan. It helps you understand how your loan stacks up against others on the market and lets you know if you could be saving. It is easy and only takes 2 minutes.
- Fill in your loan details
- Get your loanScore
- See how much you could save
- Set a savings threshold for alerts
- Take action easily
Can I get a holiday?
Mortgage holidays are more readily available to borrowers who have a good repayment history with their lenders.
Lenders assess on a case-by-case basis, but in general they will want to know that your financial hardship is the result of a short-term change of circumstances, not something that is likely to be ongoing for several years.
Different banks have different policies on mortgage holidays, with three or six month holidays on offer, and they vary in how they assess customers’ eligibility.
For that reason, it’s a good idea to consult your bank or speak with a mortgage broker, who can help you gather the necessary documentation and guide you through the application process.
What would a mortgage holiday look like?
Taking a coronavirus mortgage holiday could add to the size of your mortgage, so it is possible that you end up having more to repay when the holiday ends.
When you take a mortgage holiday, the interest from the deferred payments will be added to the loan balance and this can quickly add up, as shown in this hypothetical scenario below.
Imagine that someone has just started paying off a $500,000 loan with a 3% interest rate and a 30-year term. If they took a six-month mortgage holiday, that would add an extra $7,547 to the total loan balance.
After the six-months the homeowner will have to either keep paying back the loan for a few months past the 30-year term or bump up their repayments from $2,108 per month to $2,139.84 to pay it all off before the 30 year term ends.
Should I get a holiday?
Of course, for some people right now this may be the only option, especially if your financial situation is under pressure and you will struggle to make your repayments.
But Denham says before you take that step you should contact your mortgage broker to explore other strategies.
It could be that you have made extra repayments in the lead up to the crisis and your home loan might have a redraw facility, which you can use to meet your mortgage payments.
Going back to your existing lender and trying to negotiate a cheaper rate is another good idea and Denham says even a small reduction can make a big difference for some people.
There is also the option of refinancing your home loan with another lender offering a cheaper rate. Several are currently offering rebates for refinancing, which will be more than enough to cover the fees.