In this article:
COVID-19 has had significant flow-on effects in many areas of our lives; personal, professional, emotional, physical and financial. And unfortunately, for a large number of Australians, these effects are interconnected. If you’re feeling financial after-effects and stress due to the pandemic and the lockdowns, here are some ways to lighten the load.
Speak to your lender
Interest rate review
If it is more than a year since you’ve reviewed your interest rate, you may be paying too much. Asking for an interest rate review could see a substantial discount in your current rate or the offer of a competitive fixed rate. This simple change could save thousands of dollars in interest charges over the life of your loan while also reducing your monthly repayments now.
Access your redraw or offset
If you’ve been paying extra on top of your minimum monthly repayment, you may have surplus funds sitting in your home loan available for you to use. You could withdraw these funds to help with living expenses or ask for your payments to be taken from these extra funds.
Change your repayments
You may be able to restructure your repayments to reduce the amount you pay each month.
- Change to interest-only repayments
- Pay the minimum repayment if you’ve been paying extra each month
- Extend your loan term to reduce repayments.
We have you covered on all stages of your property journey
Your bank will have a dedicated team and hardship processes in place that can help you if you have missed a payment or expect to miss a payment due to a change in circumstances. Generally, these are short-term arrangements (such as repayment deferral) that may help to alleviate the financial burden of home loan repayments.
No matter the level of support you need, it’s important to seek help early to find a solution that eases the financial worry while keeping you in your home.
Are you eligible for government support?
You may be eligible for a range of federal and state government support payments or loans to help you meet the cost of living if COVID-19 has impacted your income.
Review your budget
Whether your income has changed or you want to better handle your budget due to the uncertainty, it’s a good time to review your budget to understand where you stand.
Reduce your spending
Track your spending so you know what’s going out the door each month. You can do this manually or by using apps. Decide what’s critical or necessary and think about reducing some discretional spending until your budget is back on track.
Lower your monthly expenses
Speak to your electricity, phone and gas providers and insurance companies about getting a better deal. If you’ve been paying extra on your loans, credit cards or regular bills, now might be the time to reduce your payments to the minimum amount required.
Financial counselling is a free and confidential service offered by the National Debt Helpline to Australians in need. Counsellors are trained to give you independent advice that will help you get a handle on your finances if you’re experiencing hardship or concerned about your finances. There is also support for small businesses and farmers – you can find links to these financial counsellors on the Money Smart website.
Check-in with how you’re going
Once you’ve got the support you need, don’t forget to review how you’re going. This will help you get back to normal sooner or give you a heads up that you need a little more support.
If you want to know what options you have with your home loan and lender, speak to a Yellow Brick Road Mortgage Broker. We’re here to help.