It’s not just about health, the economy will suffer
Governments around the world have been in a position to choose between the economy and health. Unfortunately, many have prioritised the economy and as a result, more drastic actions will need to be taken later.
This pandemic has the potential to be a 1 in 100 year economic event due to massive disruption to almost every industry.
You may be personally affected, particularly if you have an irregular income or own a business. What can you do now to prepare?
What are the benefits of refinancing now?
Refinancing can help you in numerous ways:
- Release equity from your property so that you have cash on standby.
- Consolidate your debts into your home loan, reducing your repayments.
- Get a lower interest rate. Fixed rate home loans are very low right now.
- Some of our lenders are offering borrowers cashbacks of up to $4,000 for refinancing.
- You can switch to interest only repayments, reducing your repayments further.
- Changing to a lower monthly repayment will increase your cashflow.
- You’ll be ahead of the curve in case of a job loss, loss in hours, income loss, etc, when getting finance will be difficult. If you suffering from financial hardship due to the coronavirus, there are mortgage relief options available.
- If you have a secure income, then refinancing will help you repay your loan faster if you can make additional repayments. This reduces your loan term and you pay less interest.
Why do you need to act now?
There’s a short window of opportunity to take action because there is a cascade of effects that the coronavirus will have on our economy and lenders.
- Bank valuers will likely be more conservative a few weeks from now. This reduces what you can borrow.
- Bank valuers may refuse to visit properties, making it impossible for lenders that require them to lend.
- Banks look at your two most recent payslips if your casual, overtime, commission, bonus or other variable income type drops then you may not get approved.
- Most lenders have their staff working from home, inevitably there will be delays.
- Lenders will prioritise loan applications to buy a property, which means your refinance may be delayed.
- Australia is likely to go into a total lockdown which may cause lenders to stop lending.
- Some lenders require face to face meetings to identify borrowers, which may not be possible.
We believe you have approximately one week, maybe two weeks, to take action before refinancing becomes more difficult.
If you’re currently on a repayment holiday, please read our guide on refinancing your home loan after a repayment holiday to go over your options.
What should I look out for when refinancing?
- You can use our refinance calculator to see if you getting a better deal and saving more by refinancing.
- While you might be tempted to take advantage of the low fixed rate interest environment, you should think it over. Read our page on ‘Should I fix my home loan?‘ for more information.
- Look for a home loan that offers flexibility like the ability to make extra repayments, offset facility, ability to redraw, etc. These will help you manage your finances and pay off your mortgage sooner.
- Once the fixed interest rates period ends, you might incur fees and need to pay a higher interest.
- If you’re going through financial hardship, then getting a refinance might not be easy. However, banks have introduced various mortgage relief options to help those who are affected by the coronavirus pandemic.
How can we help as mortgage brokers?
Our mortgage brokers are working from home for their safety, however they will be working overtime to help our customers.
Our team is constantly monitoring the position of lenders to ensure we can avoid lenders that are unable to approve loans during this time.
Email your Home Loan Experts mortgage broker, call us at 1300 889 743 or fill in our free assessment form if you’d like our assistance.