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6 Common home loan questions during Covid-19

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Over the recent months, our team of experts have been fielding many questions around the possibility of refinancing and buying a new home during a pandemic. If you’re questioning if it’s the right time to refinance your loan, don’t worry you’re not the only one!

With many of us spending more time at home and possibly working fewer hours, now can be a great time to reevaluate your expenses, including the major one being your home loan.

Here are the six most common questions you’re asking during the Covid-19 period:

1. I am on a high rate, but have been temporarily stood down by my job because of Covid-19. Can I refinance if I am under a job-keepers payment as a casual worker?

So many homeowners are asking this and unfortunately many banks are not considering the job-keepers payment as income in order to service a loan. This is because in the banks’ eyes, your job is not secure and there is a higher risk of the company discontinuing your employment. Also your company will need to reapply for the job-keepers payment from the government which isn’t always guaranteed. It may be smart to wait until your role is secure again and check again in a few months.

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2. Rates are so low at the moment, but I am unsure if I should refinance. Should I wait until Covid-19 is over then refinance later?

If you’re on a high rate, it’s typically better to review your loan and look at options to refinance sooner rather than later, especially since rates are sitting at a historic low.

Also if your situation changes and you suddenly can’t afford to make your repayments and are put on a repayment plan, you would still need to pay back the accumulated interest on the higher rate which then gets added on top of the loan after a 6 month period.

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3. I have found a property, but is it the right time to buy?

Unfortunately, we don’t have a crystal ball to say whether house prices will go up or down. However, interest rates are the lowest they have ever been so now can be a great time to get a home loan deal.

If you think you’ve found a property at a reduced price because of Covid-19, be sure to do your research on comparable properties in the area. You can also get free property report here.

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4. I’ve frozen my mortgage repayments but I do want to get a lower rate. Can I refinance now?

If you have frozen your mortgage repayments, many lenders will typically require you to wait at least 6-12 months after you’ve restarted making regular repayments before they would approve a new loan.

Most banks will need to see 6 months of loan statements with clean repayments before they could take you on board.

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5. I am a casual worker and have been working fewer hours as a result of Covid-19. Can I still refinance?

This will depend on your individual situation. Banks have different ways in which they calculate your borrowing capacity based on the current income. Speak to one of our consultants here at Lendi to find out whether it is applicable to your situation.

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6. My interest rate is fixed at a high rate for another 2 years. I want to refinance to a lower interest rate, is this possible?

Yes, it is generally possible, though it will depend on your individual situation.

In order to refinance before your fixed term ends, you’ll likely need to pay a break fee. Your break fee amount is calculated by your lender and will depend on a number of factors. You’ll need to weigh up your options and calculate if the savings from a rate reduction will outweigh the costs. A home loan specialist can help you calculate this.

There are many factors banks will consider when you are submitting an application for either refinancing or purchasing a new property. It is certainly never a one-size-fits-all situation, so if you have a unique scenario or require further clarity on any questions, our experts are always here to help. You can choose a time to chat with an expert here.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

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Tags: rba cash rate, reserve bank, interest rate, refinance, new purchase

Check today's low rates

Tell us what you are looking for and see if you can save.

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Check today's low rates

Tell us what you are looking for and see if you can save.

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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. Lendi's board is majority independent and non-executive.
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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