The recent announcement that customers who are still experiencing financial struggles as a result of COVID-19 will be given an extension of four more months to start paying back loans, is a welcome relief for many Australians.
But for clients currently managing their own unique financial stress, it’s important to educate them that these deferrals are not automatic.
Key points to understand about loan deferrals:
- Extensions on loans are not automatically granted and will only be on offer for those experiencing proven financial hardship
- Since the initial offer of loan deferrals was offered by the financial lenders, more than 800,000 customers have elected to defer repayments during the pandemic
- Although banks and some other financial institutions are also offering help with restructuring or changing current loans, connecting with a trusted mortgage broker is still a positive way to understand all the offers and options available, across a wide variety of lenders
- Extensions on loan deferrals cannot continue indefinitely and any loan customers who can afford to repay mortgages and loans will be expected to meet their repayment obligations once the initial six-month deferral period officially ends in September 2020.
Changes to Wage Subsidy Schemes and How It Impacts Loans
The Federal Government’s recent announcement about changes to the economic support offered by JobKeeper and JobSeeker wage subsidy schemes will see some Australians economically worse-off, after September, while for those working in other industries less affected by lock-down laws, incomes may return to pre-pandemic normal soon.
Negotiating New Loan Terms Can Help Relieve Financial Stresses
Options available to those who are still experiencing financial difficulty could include loan-restructuring, extending loan lengths, conversion to interest-only repayments for a defined time-frame, or other avenues of debt consolidation.
With the Australian Prudential Regulation Authority committed to easing regulations on the banks, it is clear financial institutions are being encourage to support customers through what looks set to be some tough times still ahead and for customers feeling that financial stress, open communication with your lender or loan broker, is the smart way to tackle the issue before it becomes a bigger problem.
For the latest information about loan deferrals and how to manage your loans, talk to our Mortgage Broking experts at Lending Specialists today.