Home Loan Repayment Guide During Pandemic
The Covid-19 pandemic has undoubtedly shaken global economies in a magnitude that has never been seen before. Its impact has dwarfed that of the 2008 global financial crisis (GFC) in 2008.
For months, many Australian homeowners have struggled financially to keep up with their home loan repayments. As a response, Australian banks are ready to disburse A$100 billion to those who have lost their jobs and missed home loan repayments during this high time of uncertainty.
More loans, lower interest rates
A large chunk of the stimulus package vouched by the RBA, which amounts to A$90 billion, will be allocated for cheap loans to Australian banks. This amount will then be used to fund loans targeting small businesses and to lower interest rates to 0.25%.
The fiscal stimulus package from RBA ultimately eased up the regulatory requirements for commercial banks and in effect, will stimulate economic relief.
Is it the best time to take out home loans?
With the fiscal stimulus package made available, banks are competing for their cuts in the competition. This ultimately makes the interest rates even more advantageous for home buyers.
While it may seem that it’s not the best time to take out a home loan, considering how uncertain the economy is, it is still worth considering. If you’re unsure whether to get that home loan or not, make sure to talk to your trusted broker and discuss your circumstances to get informed advice.
Anticipate unexpected expenses
With the current economic volatility and job uncertainties, make sure that you have ample amount of savings to finance unexpected expenses. If you are currently employed, anticipate the possibility of losing a regular source of income.
It is worth noting to have contingency plans should you or your family face hospitalisation, prolonged quarantine, among other things.
Talk to your lenders
Since many banks have released measures that aim to lessen the burden of their clients, it’s best to check whether they have waived penalties or lowered the interest rates for your outstanding mortgage.
Ask if you need to lodge an application to avail of those programs. Discuss your circumstance with your bank or lender and see if they can offer some relief on your current mortgage.