Dear All,
We are seeing a lot of misinformation about lender hardship options for people with a home or investment loan.
Unfortunately, many people are hearing that they can simply pause or defer their home loan repayments. What they are not aware of is that all interest, fees and charges will simply continue to accrue over that time, still needing to be paid off at a later date.
This means that at the end of the paused period your loan balance will be higher, and your minimum repayments will increase slightly so that your loan can still be paid within your loan term. You will still end up paying the same interest and fees you would have if you hadn't paused your loan repayments – in fact, you will probably pay more.
Don't get me wrong, pausing loan repayments can be the right option for you depending on your personal circumstances – but please be aware the lender is still charging you interest and adding it to your loan that you will have to pay back.
Of course, you should check the exact hardship policies of your lender.
You may also consider other options that may be available to you:
– Refinancing to a lower rate – where possible, this is the best option as it genuinely saves you money.
– Temporarily switching your loan to interest only – reduces repayments, but costs more in the long run.
– Redraw extra payments you have made – gives you access to your own money, but slows down repaying the loan.
– Reduce your repayments to the minimum if they are set higher than that – reduces repayments, but costs more in the long run.
– Extend the term of your loan – reduces repayments, but costs more in the long run.
Exactly what is the best option for you requires a good discussion about your current situation and what you expect to happen.
Please feel free to contact me about this.
Regards
Anis Rahman
0406872818
