New rock bottom rates
Options during these uncertain & changing times
We are certainly in changing & uncertain times at the moment. Rates are at historically the lowest we have seen whilst we are in a 100 year event.
Some lenders are still yet to announce their movements on the most recent RBA reduction. But some of the latest fixed rates out are 2 year fixed @ 2.09% and 3 year fixed @ 2.14%.
For those who have a fixed rate at the moment – it may be tempting to break those fixed loans – but know your numbers. Break fixed loans can be expensive. Firstly, obtain from your lender what that break cost would be. Then we can do a manual calculation & amortise the loan to see what you would actually save under the new rates and see if it is worth doing.
Most financiers have announced a range of measures to assist businesses and personal customers. These complement the federal government and Reserve Bank of Australia’s stimulus packages.
Customers impacted by COVID-19 have several options available to them. Depending on their circumstances and the financier. Some of the options available are:
- Repayment Pause: A deferral of repayments for all home loans, for a period of up to six months (interest will be capitalised).
- Move to Interest Only: Conversion from principal and interest repayment structure to interest only for a period of time for their home loan.
- Cashback/Redraw: Customers who have made additional repayments on their variable home loans are able to access cashback (up to the value of the advance repayments minus the value of one month’s repayment) to assist them with expenses. For fixed rate home loans, customer need to make a special request to their financier to grant an exception, allowing them to access cashback on their loan.
- Modify Repayments: Customers who have made additional repayments on their home loan and are ‘in advance’ and are able to reduce or suspend their repayments (up to the value of their advance payments).
Customers can apply for financial hardship and action the above options by contacting their lender. Most lenders now have this option online via their websites (call centres will be impacted so if you can manage online – it would be the quicker option).