Is it really a mortgage holiday?
Marlène Liontis- Commercial Finance Broker-Liberty Adviser
Commercially Accredited Finance Broker @ Liberty Network Services P/L | SMSF Loans| Business Loans| Commercial Finance| Investment & Car Loans| Asset Finance| Debt Consolidation| Personal Loans & Residential Mortgages
In March this year, the big four banks let borrowers hit pause on their repayments, with many other lenders following suit.
What many borrowers failed to realise, was that any pause in repayments, will end up being capitalised into the rest of the loan
In plain English- after the mortgage holiday is done, borrowers will still have to keep up their repayments and they will have a bigger balance than before the deferral started.
The measures taken by the banks may have averted a short-term financial catastrophe, however it has now plunged many borrowers who want to refinance, into a new kind of dilemma.
Mortgage holidays will soon be over and banks have introduced tighter eligibility conditions as at the end of this month.
Recently, we have been met with numerous enquiries from borrowers wishing to refinance, who have also taken advantage of the mortgage holidays.
These applications are currently being rejected by most lenders, as the lenders have categorised these borrowers as having "fallen into hardship".
The same applies for borrowers who have recently accessed their Superannuation or who are on JobKeeper.
In addition, "mortgage repayment holidays" may have an effect on a borrower's credit rating, further alienating them from their goal to refinance.
If you are currently on a mortgage repayment holiday and would like to refinance in the near future, here are our recommendations:
* Speak to your lender about resuming repayments as quickly as you can.
* If possible, re-pay any of the payments you have missed out on.
* Check your credit rating to see if it has been affected and attend to any other issues on your report that can offset this, if it has appeared on your report
Lenders will generally want to see 3-6 months of normal repayment activity before they will consider refinancing applications at the present time.
If you need to speak to a broker for more advice, give us a call at Bee Money.
We have over 40 years collective experience in finance and specialise in residential mortgages.
Contact [email protected] or Christine Encavey on 0423 550 244 or Marlene Liontis on 0417 693 547