Get assistance from your lender & How it works.
Many of you maybe unsure as to where you can get support if you have existing loans or don’t understand how deferred repayments work.
We hope you find this informative as we aim to help everyone get through this period as best we can.
Below you will find some updated information in regards to, contacting your lenders and how they can help you with financial assistance during this period.
Most lenders have the ability to defer your repayments, another thing they may offer is to change your loan to interest only repayments if that’s something that you can manage. This is definitely a conversation that you’ll need to have with the lender’s directly. Unfortunately, finance brokers can’t call on your behalf in regards to this. You can contact your lender either via their website or over the phone. A lot of lenders have been setting up websites where you will be able to lodge a form, and they will call you back and have a conversation with you and then put in place the deferred repayments. However, please contact your finance broker if you need any assistance in filling out the form. We’re here to help you. If you decide to give them a call or if there are some lenders who don’t have an online form available, you will need to call them. Please be patient as they are receiving hundreds of hundreds of calls at this time, and there may be a long wait period.
How do deferred repayments work?
Majority of lenders are accumulating the interest on loans over the deferred repayment period. That interest is then added to the loan balance after the deferred period ends, and new a repayment amount is recalculated over the remaining term of the loan.
For example, if you’ve got 25 years left on your home loan term and your loan balance is $300,000 and your loan is deferred for six months, then the six months of interest accumulated of approximately $8500 will added to your loan balance, taking your loan balance to $308,500. This new loan balance is then used to recalculate the new repayment amount over the remaining 24.5 years.
This means that you will notice after the six month period is over, your repayments will be a little higher than what they were before.
Some tips on how to reduce the interest that’s actually being charged while actually not making repayments, is to either use your offset or redraw facility if you have it. It will help reduce the interest charged during the six months.
Now, for those who have fixed car loans or those with businesses, who have chattel mortgage or commercial loans against any of their assets.What the lenders will actually do is defer the repayments for a three to six month period. What that means is that if you have a remaining term of 2 years and you loan is meant to be paid off 30th March 2022 and you defer it for six months, after the six month period, you will still have 2 years left on the loan. This means for the next six months, your loan is basically on pause and starts again after the six month period. So your loan will now be paid off on 30th Sept 2020 instead.
The more knowledge you have to equip yourself now, on the different options that are available to you. The better decisions you’re able to make during this period.
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