What are your home loan repayment relief options?

Amicus – Home Loans:
Repayment / affordability options as a result of Covid-19.

The Options

  • Interest rates / Loan Structure Optimum for you?
  • Lower your Principal and Interest Repayments
  • “Interest Only” repayments
  • “Mortgage Holiday” (Repayment Deferral)
  • Borrow more money (top up)

Interest rates / loan structure Optimum for you?

  • First step to any action
  • Can you lower your interest rate cost?
  • It may be beneficial to break a fixed rate and refix on a lower rate. Breaking a fixed rate can incur a fee.
  • Any debt on variable / floating that you can fix onto a lower rate?

Lower your Principal and Interest Repayments

  • If you have been paying more than the minimum repayments you should be able to lower your repayment amount to the minimum.
  • This is a good result as it means you would still be paying some off the loan (principal)

“Interest Only” repayments (I/O)

  • This is where you just pay the interest payable on the loan. Loan Balance therefore stays the same throughout.
  • Simple calculation: Loan amount x interest rate % divided by 52 weeks, 26 fortnights, 12 months etc.
  • E.g. $350,000 x 3.39% = $11,865 / 26 fortnights = $456 p/f interest only
  • Principal & Interest (P&I) on a loan of this size on a 25 yr term would be $799 p/f
  • Good option if you are having / going to have cashflow issues but can afford to pay the interest.
  • If you can, save the money the would have been Principal and once income is back to normal you can lump sum pay off the loan.

“Mortgage Holiday” (Repayment Deferral)

  • Referred to as a mortgage “holiday” in the media. Better called Deferral
  • No repayments are made but interest continues to accrue.
  • Your loan will essentially increase while you are not making payments. The interest will continue to accrue and be added to the loan balance.
  • For example, if you have a $400,000 loan at 4% this loan will now be $408,000 after 6 months and your loan term will extend.
  • Therefore not recommended, but for some may be the only option if you have severely affected income / cashflow.

Borrow more money (top up)

  • Loan application made to bank for a new loan.
  • Full assessment of income and expenses
  • Can provide money to spend now any way you like.
  • Only recommended if you’re 100% confident you can afford the full loan long term.

When / How can I make these changes?

  • These changes can be made immediately even if you are on a fixed rate
  • Can be ended early without fee if you wish
  • If in any doubt, discuss with trusted adviser or banker about your options as early as possible.
  • The worst thing you can do is nothing.

To find out more, contact your local adviser or contact Amicus today.

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