We recently had some clients asking about what to do with the mortgage when wages or earnings are reduced or eliminated altogether so we sought the opinion of our local broker, Stephan Roos of Smartline.
Stephan confirmed that each bank or non-bank lender will have a different policy and each will make an assessment on the client’s circumstances on a case by case basis
The following possible options could be canvassed with your lender:
- Deferring repayments for a few months and then a lump sum of all the deferred repayments will need to be made at the end of the term at which time the normal repayments commence;
- Extending the loan term and recalculating the minimum repayments to ease cash flow;
- Switching to interest-only repayments for a short time ; and 4. Switching to a different loan product, probably a fixed loan at low rates.
Each option carries risk of some sort including possibly affecting your credit score if you do not comply with the repayment agreement you negotiate, paying more interest on the life of the loan due to longer repayment terms and having to advise a lender that you have taken advantage of hardship provisions when applying for future home loans however you would hope lenders accept that in this environment the use of these various provisions should have minimal impact on your credit score or future lending potential.
If you need advice on your options, contact your local broker. If you are currently thinking of buying or selling email Nicole for a free preliminary advice at hello@eConveyancingNSW.com.au