With Greater Sydney now in lockdown, all non-urgent construction has been put to a halt until at least July 30, 2021. The construction industry employs almost 250,000 people in Sydney alone, and it’s not just the builders affected. An estimated 150,000 businesses are involved in the construction sector, and all of them will be closed during this period, unlike last year.
CBA has extended a no-evictions pledge until February 2022 to all its customers that the COVID-19 lockdown has negatively affected. The bank will not evict customers from their homes until then. To be eligible for this support, customers will need to have a year of timely repayments to this point.
Westpac also announced it will offer its existing small business customers relief in the form of an interest-free overdraft facility. They can now access up to $15,000 for six weeks to fill urgent needs for access to cash.
Many other banks are willing to help customers as well. The CEO of the Australian Banking Association, Anna Bligh, suggested that the best thing to do if you’re struggling financially is to call your bank and ask about their mortgage relief options.
Here are some common mortgage relief options provided by lenders in light of recent lockdowns:
Many lenders are now offering a repayment holiday option, where your home loan repayments will be essentially frozen for a limited period. A repayment holiday is also referred to as a mortgage freeze or mortgage holiday by some lenders. Usually, it can last from three to six months.
A redraw facility allows you to access any extra repayments you have made over the required minimum repayments over the years. This can come in handy to use as emergency funds to cover your expenses elsewhere. Some lenders have a set amount that you can borrow, while others allow you to redraw all the extra repayments you have made. Please check with your bank to find out how much you can redraw.
There are minor fees that lenders charge their customers, like monthly or annual service fees for servicing and administering the loan. Many lenders are waiving these fees, which can be up to $500 per year. Other fees that lenders are willing to waive are late repayment fees for a certain period and redraw fees if you choose to use the redraw facility.
Changing the loan structure
Lenders are also offering to change the loan package if it benefits the customer. For example, one of the major lenders is offering their customers an option of increasing the loan term so that the monthly repayments can be lowered. If you request your bank, they could also add your overdue repayments to your loan balance, so you’ll no longer be in arrears.
You can also change your loan to interest-only repayments. However, it will only be for a limited period of up to 12 months. However, there may be criteria you will need to meet to qualify for interest-only home loans during COVID-19 lockdowns.
Besides the banks, the NSW government is also providing financial support to households, individuals, and businesses.
If you need help finding out what kind of relief you are eligible for or any other information that might make your home loan situation better, give us a call at 1300 889 743 or fill in our free assessment form.