After the year that has been in 2020, there has been plenty of financial help dished out by the Australian Government in an attempt to lessen the financial blow. With a worldwide pandemic leaving many without jobs, reduced hours and working from home, it has placed a huge strain on many Australian households.
This is where the Government stepped in and changed the rules when it comes to financial regulation and loan repayments, offering a mortgage payment deferral to those who are struggling and eligible. Of course, as Australia slowly opens back up again and businesses attempt to get back on their feet, where does this leave struggling Australians? Is a mortgage payment deferral still possible, or have the rules completely flipped back? Here’s everything you need to know.
What Is A Mortgage Payment Deferral?
Mortgage payment deferrals were introduced during the height of the COVID-19 crises to help those in financial hardship. Borrowers were allowed to take a break from paying their home loan for up to six months. The interest on the loan is capitalised. This means that it is still accrued during this time in most cases and has been added on to the cost of the loan, to be paid after the deferral period has ended. To keep the repayments as similar as possible to what they were before the deferral, many banks are simply extending the term of the loan to account for this added interest.
Most people were required to check in with their bank at the three-month mark, and were asked to begin making repayments again as soon as they were able.
According to the Australian Prudential Regulation Authority (APRA), $192 billion in payments were deferred during that time, which is about 11% of all mortgages. The latest figures show that 9% of these loans are still on hold.
Can I Still Get A Mortgage Payment Deferral?
The original mortgage payment deferral offered by the Government allowed homeowners to defer their loan for a period of up to six months. On 8 July, the Australia Banking Association (ABA) announced that member banks would be extending this period for an additional four months to bring it to the end of March.
This extension, however, isn’t an automatic one. If you are able to repay your loan, then it is expected that you do so. If you are still struggling financially, then it is best to talk to your bank about the possibility of extension and whether you are eligible.
If you never applied for the first deferral program, but have found your circumstances have since changed, it is still possible to get a mortgage payment deferral. Your first point of call should be to speak to your bank and discuss the options available. The ability to access this program is very dependent on the institution.
If you are looking to take up the offering of the mortgage payment deferral, then the best thing you can do is chat through your circumstances with the bank. It’s important for banks and customers to work together to try and come to the best solution.
Before you call them up, it helps to have the following on hand:
- A thorough understanding of your financial situation.
- Look through the bank’s website and read up on any information they have regarding the packages. It’s important to know the terms that are specific to them, so you are prepared when it comes to discussing your options.
- Draw up a family budget that looks at any income you are receiving, government support coming through and the family expenses you are trying to cover, to provide the best overview possible.
Having all this information on hand will help the bank chat with you about your circumstances moving forward and to determine whether or not the extended mortgage payment deferral is the right option.
If you are still struggling to make ends meet, then it is worth looking into a debt consolidation loan. This will consolidate your mortgages, or debts, all into the one loan, with one simple repayment to be made. This helps to simplify your finances and cut down on the costs involved with a better interest rate. This will give you less to pay off each month and make it much more manageable.
Whether you aren’t eligible for the mortgage payment deferral or are simply looking for help beyond it, speak to the team at Debt Consolidation today. We will take a look at your individual circumstances and work out the best course of action for your needs. With the year that has been, the last thing you need is more financial stress weighing you do. This is the perfect way to start looking for a solution that works for you and will benefit you in the long run.