With the local onset of COVID-19, all aspects of everyday life are changing very quickly for Australians.
In the last week alone, the Government announced a second economic stimulus package, the RBA cut rates for a second time within the month, and banks have expanded their support for people in financial hardship and in many cases made this easier to access.
Let’s break it down and look at what this means financially for homeowners and investors.
After a second rate cut, the official cash rate now sits at 0.25%. While many major banks were quick to respond to the March 3 rate cut, passing it on in full. The second rate cut however has seen a less uniform response with some lenders reducing fixed and variable rates to different degrees.
Make sure you know what your new rate will be and if it is still competitive. Many banks are now offering owner occupier borrowers, with an LVR less than 80 paying P&I, variable and fixed rates well below 3%. If your rate still starts with 3 it’s time to review your rate.
Find out what your new repayments might be in seconds.
A number of lenders, including Commonwealth Bank, ANZ, Westpac, National Australia Bank, Bank Australia, Bendigo and Adelaide Bank, Heritage Bank, La Trobe Financial, have announced they are offering repayment holidays, ranging from three to six months to home loan customers who find themselves in financial hardship as a result of COVID-19. Many lenders have confirmed that a borrower’s credit score will not be impacted if they have been granted hardship assistance.
For some, taking a repayment holiday will be essential but never underestimate the value of getting expert guidance so you understand all terms and conditions and what this means once the repayment holiday is over.
Some things to consider:
You need to know all the details so there are no surprises three or six months down the track.
Some banks such as CBA are automatically moving all variable P&I customers to the minimum repayment amount from May 1.
While this is a relief for those who are already feeling the strain of these uncertain times, it might not be the best option for everybody.
A reduction in your minimum repayments means you'll pay more interest over the life of the loan. If you are lucky enough to be able to maintain your pre-COVID-19 repayment level, then you might want to look at doing this for as long as feasible by opting out of these automatic adjustments or by putting the difference into an offset account.
It will depend on your individual circumstances but this option could be a good way to secure a competitively low rate while also easing the financial burden if your income is affected by COVID-19. Discuss your options with one of our experts here.
With so much going on and so much information to absorb, it is important to fully understand the longer term implications of making adjustments to your home loan repayments. If you’d like guidance on what your bank is doing and your options, speak to an expert today. We are here to help.
To date, the Federal Government has announced two stimulus packages worth $83 billion. Within this there are measures aimed at businesses as well as individuals to provide greater financial security to both employers and their people through this period. The aim is to keep people in jobs and support those who face unemployment as a result of the economic impacts of COVID-19.
Some of the key measures being implemented to support households are -
Although accessing your super now might seem like a good fix, again it is crucial to understand what this will mean long-term and if there is a better alternative.
If your rate is older than January 2019 or it still starts with a 3, you could be overpaying by thousands of dollars every year. Now is the time to find yourself a better deal so you can have some financial comfort and our experts are here to help.
We're here to help. Get free expert advice at a time that suits you. Choose a time to chat with a Home Loan Specialist here.
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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