It’s a very stressful period for many homeowners, as coronavirus restrictions have led to increased job losses and reduced salaries around the country (and the world). At times like these, it is easy to feel dissatisfied with your financial situation, especially with the added pressure of mortgage repayments on your home.
However, there are still some options that you can explore as a homeowner, to help relieve financial hardship. We spoke to the experts at LJ Hooker home loans, who put together potential options that could contribute to alleviating some stress caused by the pandemic.
Refinance your home
Renegotiating your home loan can seem daunting, but it is a fantastic way to cut back on your mortgage expenses.
Now is a great time to do it, because interest rates are at a historic low. Talk to your current bank as well as other banks, and capitalise on competition to take advantage of these new, lower rates.
Begin by consulting your current bank. If they can’t give you the ideal rate, explore other options with other mortgage providers, and let your current bank know.
Having a good credit history will give you the power to negotiate with banks. They are looking for reliable candidates for loans, so use this to your advantage to get the best rate possible.
To give you an idea, the lowest interest rate advertised (as of April 4 2020) belongs to UBank, claiming a 2.59% annual interest rate on home loans. This is closely followed by HSBC, boasting a 2.65% interest rate.
Reduce your mortgage repayments
It is easy to go unnoticed, but you may be paying more than the minimum instalment on your home loan. If this is adding to your stress, contact your bank and inquire about reducing your payments to the lowest possible.
Keep in mind that this reduction could be a short term arrangement until coronavirus restrictions lift. You should be able to readjust your payment level when the pressure on your finances is over.
Find out your bank’s home loan relief plan
Most banks have relief plans for home loans to help deal with situations exactly like the one we are facing now. Get in touch with yours to find out what these entail and if they apply to you.
Right now, many banks have options to reduce your payments, negotiate a new home loan rate, pause payments or access redraw or offset.
Do your research to find out what your bank offers and what relief you can get.
Consolidate other forms of debt
You likely have more debts than just your mortgage. Other repayments could include a car loan, credit card or any other loan on a big-ticket item.
Try to discuss reducing these payments with your debtor. Businesses are empathetic to the challenges many are currently facing, so have an honest discussion, and you could get a good result.
Make use of government packages
The government is constantly announcing new stimulus packages in an attempt to keep the Australian economy afloat during this crisis. Every day they are lowering eligibility requirements, so keep checking if you can apply.
The requirements to claim the regular subsidies (such as job seeker and youth allowance) are being relaxed. Moreover, there are new coronavirus supplements being added to these regular payments. There is also the introduction of the “Job Keeper” payment.
Go here to find out more about your eligibility.
If you need a more immediate fix than the above suggestions provide, don’t worry. There are some quick fixes for the short term that you can use in an emergency.
You can withdraw funds from your superannuation account if necessary. The government has temporarily allowed a maximum withdrawal is $10,000 and the minimum is $1,000. This could be an option to help with cash flow.
An option to consider as a final resort is selling your home. Make sure you have really considered the impact this will have before undertaking the sale of your biggest asset.
Selling your home at the moment is not as bad as you might think. The volume of sales has decreased, but demand from serious buyers is still well present. Competition has increased with limited stock on the market, which will give home values a small boost.
It is crucial to keep calm during these stressful times if possible. Regularly reassess your options and look into how you can release any financial strain. Remember that the COVID-19 pandemic will end and the economy will rebound, so any financial strain is most likely to be short term.
For more information speak to your Avnu agent or for mortgage advice head to LJ Hooker Home Loans.
DISCLAIMER – The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker Avnu will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.