This post comes to you from: Mortgage Broker Adelaide - Home Loans Adelaide - Urbantech Finance
Updated: Monday, March 23rd, 2020
Attempts to control the COVID-19 outbreak through social distancing, including strict lockdown measures, are having a dramatic effect on our everyday lives.
The purpose of this post is not to lecture you on how to wash your hands, but rather to let you know about a range of financial options and practical strategies available to you in this challenging economic environment.
From central banks around the globe to domestic institutions within Australia, rapid action is being taken to ease the financial burden on individuals, families and businesses.
In addition to the government’s coronavirus stimulus packages, lenders have begun announcing assistance packages for borrowers affected by the COVID-19 epidemic.
Banks have assured their branches will remain open for business, and that precautions are being taken at each location to protect the safety of their customers.
They’ve also guaranteed they will continue to process loan applications quickly and efficiently and are encouraging consumer and business customers facing hardship due to the virus to reach out to discuss the options available to them.
Here are some of measures currently being rolled out by lenders;
Home Loans
- Deferral of scheduled loan repayments [including IO loans] for up to 6 months
- 70 bps interest rate reduction to 1 & 3 year fixed home loan rates for owner occupiers paying P&I – now just 2.29% p.a.
- 2 year fixed rate of 2.19% p.a. for owner occupiers paying P&I
- Automatically reduce repayments for all variable P&I home loan to the minimum required within the borrower’s loan contract – borrowers will have the opportunity to opt out if they wish to retain their current principal repayment levels
- Waiving of fees for the restructuring or consolidation of existing loans [ie. switching from P&I to interest only]
Term Deposits
- 60 bps increase in 12-month term deposits to 1.70% p.a
- Waiving of early withdrawal fees and interest rate reductions for early withdrawals on term deposits prior to maturity
Credit Cards
- Emergency credit card limit increases
Personal Loans / Overdrafts
- Discounted interest rates on new personal loans taken out by existing customers
- Increase eligibility criteria for personal overdrafts
Business Loans
- Deferral of scheduled loan repayments for up to 6 months
- Rate reductions on business loans of 125 bps
- Overdrafts will be reduced by 200bps for new and existing small business customers
- Additional resourcing and extended hours for commercial lending teams to ensure faster decision times
- Working capital assistance – participate in the RBA’s new term funding facility, aimed at providing low-cost credit to businesses
Equipment Finance
- Deferral of scheduled loan repayments for up to 6 months
Note: The amount and type of assistance available does vary from lender to lender. You will need to contact your lender directly to confirm what options are available to you. We will continue to update this list and new information and measures come to hand.
Important: Keep in mind these measures are designed to assist people suffering financial hardship. If you can continue to meet all of your financial obligations each month then you should because providing evidence of financial hardship to your lender will likely impair your ability to borrow additional funds from them – at least in the short-medium term when you may need it most. [Update – Credit reporting agencies and lenders have outlined that hardship arrangements are typically not reported as defaults, and therefore do not impact a borrower’s credit score, with APRA also stating that banks need not treat repayment holidays as arrears.]
Can your finances weather the storm?
In the current environment having access to between 3-6 months’ worth of mortgage repayments and basic living costs could be critical in the case of a job loss, redundancy or significant downturn in your business.
Here are few thoughts on how you might try and safeguard yourself against a short-term financial challenge;
Home Loan Redraw
Since 2011 the cash rate has been cut 16 times, falling from 4.75% to just 0.25%. During this time many customers have opted to put interest savings back into their mortgage, sometimes unintentionally as many banks’ default position is to keep mortgage repayments the same even after an interest rates drop.
As a result many Australians are already ahead on their mortgage, meaning they have funds available in their redraw should they find themselves in a tight financial position.
Equity Release
Should the need arise, it may be possible to refinance and increase the size of your loan to access more of the available equity in your home.
This is good option for people with low LVR loans and those who have seen property values increase since first getting their home loan.
Renegotiate / Refinance
Contact your lender and ask them to lower the interest rate on your home and/or investment loans. Many banks offer better deals to brand new customers so if you have been with your lender for 2 years or more there’s a good chance you could get a better rate.
If your bank won’t or can’t help then you may want to consider refinancing to a new lender with a better rate to lower your monthly repayments.
If you have been making principal and interest payments you may also want to consider switching to an interest only loan to reduce your repayment amount.
As finance brokers we can help you compare all of the available options and make sure you get the best deal. In fact, there has never been a better time to review your loan rates with many lenders providing cashbacks offers of between $2,000-$4,000 to make the switch.
Personal Loans
If you find yourself short on funds you may wish to consider a low rate personal loan.
A personal loan can also be used to consolidate any high interest debts [ie. credit cards] into one cheaper and easy-to-manage monthly loan repayment.
Unsecured Business Loans
An unsecured business loan can be used for any business purpose including the payment of wages or suppliers and even BAS and other ATO obligations.
All you need is an ABN and 6 months in business to apply and you can borrow as much as 100% [often more] of your monthly business income/turnover. Applying is quick and easy and you will usually get your funds within 1-2 business days.
Other Funding Options
We also have access to private lenders and short term asset loans whereby you can raise funds against any freehold asset of value.
>> For more details on any of these finance options simply email us your enquiry, contact your Urbantech Finance broker or call us on 08 8451 1500 for assistance.
WHERE TO FROM HERE…
We obviously need to follow the latest health advice and take the precautions being suggested – however at times like this, it’s important that we don’t panic and continue to go about our business as best we can.
Things are changing daily and new measures are being implemented to soften the economic impact COVID-19.
The RBA, APRA and ASIC will meet with lenders later this week to discuss measures to facilitate the continued supply of credit to households and businesses. Meanwhile the government is looking at implementing a second stimulus package to sure up the markets. [See NEWS/UPDATES…]
The RBA is also meeting today, where an inter-meeting rate cut has become a very real possibility – economists are predicting a further 0.25% cash rate reduction will be announced. [See NEWS/UPDATES…]
For Urbantech it is business as usual with no interruptions to the services that we provide. More than ever we remain committed to assisting you with all of your finance needs.
The key message we would like to convey to you at the moment is – you have options should things become more difficult, and we are here to help you.
To that end please don’t hesitate to contact us any time if you are thinking about making a change to your finances. We’re here to answer your questions and take the necessary action to sure up your finances in these uncertain times.
NEWS/UPDATES
Government announces a $66 billion second coronavirus stimulus
What the Federal Government’s second coronavirus stimulus package actually means for your wallet
Banks to defer loan repayments for small business
RBA cuts the cash rate by 25 basis points to 0.25% at emergency meeting
The Federal Government’s second COVID-19 economic rescue package
New investment to support SMEs in COVID-19 fight
Repayment holidays unlikely to impact credit reports
For more articles and updates visit – www.facebook.com/urbantechgroup
For more details feel free to call 08 8451 1500 or email us with your query.
Cheers,
Sam, Matt & Andy
Urbantech Finance
PS. Just a final note, it’s not all doom and gloom – in fact, in times of financial uncertainty new opportunities can present themselves whether you’re a property investor, developer or small business owner. Keep a positive mindset, make smart financial decisions and keep an eye out for any opportunities – who knows, rather than just survive, you might even thrive during these difficult times.
We hope you enjoyed our post: COVID-19 – Your financial options during these uncertain times…