In this article:
Here’s a quick peek into what you can expect during and after a COVID mortgage holiday along with some other alternatives you could explore.
After a COVID Mortgage holiday
A mortgage holiday will increase the cost of your loan as interest capitalises during the holiday period. You will either need to increase your repayment amounts, extend your loan tenure or opt for a combination of the two. In all cases, the cost of your loan will increase.
Other options you could explore
If you have been severely impacted by COVID and are not confident of future income, stick with your current lender and apply for relief immediately without missing a repayment. If you are however in a situation where you are just about meeting repayment requirements but are looking at savings on your home loan here’s what you could consider:
- Interest-only repayment options: A lot of lenders are allowing borrowers to switch to interest-only repayments for a fixed duration. This could help you reduce repayment amounts without increasing the cost of your loan as much as a mortgage holiday.
- Refinancing: If your home loan is over two years old, chances are your rate is not competitive. Compare your mortgage rate to what is the market is offering. Even a small dip in your interest rate could reduce your payment size substantially instantly adding funds to your monthly budget.
It’s best to seek professional advice to understand which option works best for you. If you are in dire straits, opting for a mortgage holiday at the earliest is crucial. Reach out to us for the perfect fit as per your circumstances.