Life as we know it has been changing in this new COVID-19 world, so the team at Wayne Henry Mortgages want to assure you that we are here to help and support you during these unprecented times. Banks, governments and advisers like us appreciate that this is a once-in-a-lifetime event and everyone is jumping in to do their bit.
Please don’t hesitate to reach out to us if you would like some advice and guidance on how the banks can help and support you through this challenging time.
How your bank may help?
Deferred mortgage repayments vs interest only repayments
If you’re considering deferring your mortgage repayments, be aware that it’s actually a deferment where:
- A: The money will either be added to your outstanding balance or
- B: your mortgage term will be extended.
A better option could be for you to apply for a period of interest only repayments on your mortgage. The benefit of this is the balance of your mortgage will still be the same as it is today, at the end of the interest only period.
However for some, there may be no other option but to defer your mortgage repayments and we will be able to help you with that. To understand how the two options could look, just get in touch and we’ll run the numbers for you.
Let’s compare the two, on a $300,000 mortgage with a 30 year term at an interest rate of 3.45% pa, your monthly repayments would be $1,339 per month.
If you deferred your repayments for 6 months, the principal portion would cease and the interest portion ($862.50 per month) would continue to be calculated and added to your balance which would be $305,175.00 at the end of the 6 months.
If you took a 6 month Interest Only period on your mortgage, your monthly repayments would drop from $1,339 per month to $862.50 per month, a saving of $476.50 per month. At the end of the Interest Only 6 months your balance would be $300,000.
For many of us, the monthly saving of $476.50 will be enough relief to keep us going and in our opinion far better than seeing your debt grow.
Important points to consider when deferring your mortgage repayments
Bank support contact channels
Government wage support
Impacted businesses can access a wage subsidy of $585 a week per full-time employee and $350 a week per part-time employee for up to 12 weeks at a cost of up to $9.1 billion.
To qualify businesses need to commit to continue to employ staff and pay them 80% of their current wage, show they have suffered or project to suffer a 30% or more reduction in revenues and have taken steps to mitigate the impact of COVID-19 on their business.
The initial $150,000 cap was removed which means basically every impacted business will be covered, enabling them to support their workers.