Coronavirus and your Mortgage:
It’s worrying times for many homeowners who will be affected by the COVID-19 pandemic. Due to strict new rules, chances are you’ve had to put your home renovation Brisbane dreams on hold. The biggest concern for many is the coronavirus and your mortgage. How will you pay it if you lose your job? Expand Renovate has sourced and article that can help with getting answers. The below is an excerpt, you can read the full article here.
Will mortgages be put on hold?
The big four banks have all announced that their customers will be able to pause mortgage payments.
If you’re with Commonwealth
- You will be able to defer home loan repayments for up to six months
- Interest will be capitalised
- Interest and charges will be added to your loan balance
- Your loan balance will be recalculated at the end of the support period
- Your loan term will be extended so repayments stay the same as they were before you started the deferral
If you’re with Westpac
- You will be able to defer repayments for three months
- A three-month extension is available after review
- This option is for people who have lost their job or income as a result of coronavirus
- Deferred interest will be capitalised, so your repayments will increase for the remainder of your loan term
If you’re with NAB
- You will be able to defer your repayments for up to six months
- There will be a three-month checkpoint with the bank
- You are eligible if you are a home loan customer affected by the coronavirus
- This applies for owner-occupiers, investors or those on a principal and interest or interest-only repayment schedule
- You will still be able to redraw during the repayment pause
If you’re with ANZ
- You may be able to put your repayments on hold for six months
- Interest will be capitalised
- The bank will check in with you after three months
And if you’re with Bendigo Bank (Australia’s fifth-largest bank)
- You can apply for six months of relief.
Do I need to provide some kind of proof?
Some banks explicitly state only customers affected by coronavirus will be eligible to pause their repayments.
But whether you need to provide proof (such as a doctor’s note or severance form) to verify you have been affected by coronavirus depends on which bank you’re with.
CBA says no evidence is required to request a deferral, although you may be asked to declare you have been impacted by coronavirus.
Westpac is currently looking at each request on a case-by-case basis rather than imposing blanket requirements.
ANZ’s stance seems to be that if you have been up to date with your repayments, you will most likely be eligible.
NAB customers wanting to defer payments will not need to provide any evidence. A pause will be applied if it’s requested.
What’s the catch?
While being able to defer payments may be your best (or only) option at the moment, there is a catch.
All of the banks have announced interest capitalisation. That’s where the interest you don’t pay during your period of deferral is added to your outstanding loan balance. For example: If you have a $400,000 home loan at an interest rate of 3 per cent, you would be paying $1,000 a month in interest. If you pause your home loan repayments for six months, the interest amount is added to your outstanding balance. So in six months’ time, you will be looking at paying off a $406,000 loan.
Summary
While increasing the amount on your loan may not be the most ideal situation, it can be better than having to sell your property at a loss. If you are worried about coronavirus and your mortgage, it is best to seek professional advice. Getting assistance now can prevent even more devastating circumstances. Then, once the worst is over, Expand Renovate can come in and take the home renovation Brisbane dreams off the shelf and make them a reality.