From weddings, holidays and sporting events, Covid-19 has put on pause many of the things we were looking forward to in 2020. For a lot of us, that also included purchasing a property or indeed continuing to meet our current mortgage obligations.
Many mortgages were deferred over 2020, but with this initial wave of deferrals coming to an end on 30th September, many are wondering what their next step should be. Here are a few options:
1. Restart mortgage repayments
One of the reasons you deferred your mortgage was perhaps because of changing circumstances earlier in 2020 that are now more certain. If that’s the case, and a regular income is forthcoming, then restarting your mortgage repayments should be your go-to option.
2. Extend the loan term to reduce your repayments
If you remain in a more financially tenuous situation than when you first took out your mortgage, but still have a regular (albeit impaired) income, extending the loan term is another option to take. This will reduce your monthly outgoings; however, the overall amount to be repaid will be larger in the long-term.
3. Extend the repayment holiday
For those who need it, the Australian Banking Association has announced that a four-month mortgage deferral extension will be granted. This status is not automatically given, so it’s essential to get in touch with your bank to see if this option is open to you.
With the lower interest rates and thus lower repayment options on offer, it could be an excellent time to refinance your home loan and see if you can get a better deal. You will, of course, have to prove you can afford this refinancing, but if you are in good financial health, there’s no harm in making sure your current mortgage deal can’t be bettered.
5. Sell your property
For most this will not be the ideal option, however, if you cannot afford to keep up your payments and continue to face financial hardship for the foreseeable future, then selling your property could well be the best course of action. It is far better to relieve yourself of any debt, rather than the bank coming after it themselves.
The First Home Buyer Deposit Dilemma
Many people had aspirations to purchase their first home in 2020. However, the financial uncertainty that COVID-19 brought with it has meant many first home buyer deposits have been dipped into. That being the case, what options can help first home buyers in 2020?
Grants and exemptions
- On households up to specific values, grants are available for first-time buyers who will be able to receive up to five-figure amounts based on their circumstances
- A series of exemptions (from stamp duty for example) and concessions are available to first-time buyers helping cut some of the costs from their purchase. Each state has its threshold on the amount of aid available, so do check with the appropriate local government department to see what you can access.
First home loan deposit options
- As a first time buyer, specific low deposit home loans are being made available, so that rather than needing say the typical 20% deposit to get into the market, you only require anywhere from 15% to 3%.
Guarantor home loans
- If you have no deposit at all, you could look to getting a guarantor instead. In this way, you could unlock a loan of up to 105% of the property’s purchase price, whilst also saving money by not paying for Lenders Mortgage Insurance