Frequently asked COVID-19 Questions #4 | The Mortgage pause
Hearing alot about people pausing their mortgages?
Wondering what that looks like for your loan?
Brooke steps us through some of the things you need to be wary of, and best practice when looking to defer our mortgages.
Ok, so it’s important to understand firstly, that each lender is a little bit different, they have a different process and a different policy, and different rules about how this is going to work and how it might look for you as a client.
Its really important that you reach out to us, we can investigate you individual lenders process and policy, and we can really do some calculations and we can break it down for you, help you understand what that looks like for you before you approach them.
We’ll give you the right questions to ask, and find out what you need to have in writing from them as well.
Most lenders, almost all have a hardship policy, which is designed for when people lose their job or income even death, things like that that come up. Because COVID-19 is something we haven’t seen before, and because it’s something that has had such a profound impact on almost all of the economy, we’ve seen lenders actually go out and design policies to cover off on the hardship caused by COVID-19.
What that means is, in a lot of cases, you don’t even have to prove that you’ve suffered a loss of income, because of the pandemic. They simply don’t have enough resources to go out and investigate every single person. So most of the time, you can just call your lender, and say I have suffered a loss of income, due to COVID-19 and that will suffice for you to be able to defer your mortgage repayments. I
n terms of how that works, and what it looks like, at the end of six months, is very different from each lender. We are seeing some lenders, who will actually extend your loan term, by an extra six months, so that your minimum repayment isn’t affected, when you come off the six months. However, we are seeing some that will just capitalise the missed six months, onto your loan, causing your loan repayment to be slightly higher for the remaining term of your loan.
Again, we can step you through an amortisation schedule and show you exactly what that looks like. We can show you how much extra interest you’ll end up paying.. if when you get back to full scale, you want to pay a bit extra to get rid of that extra interest impact, we can calculate all of that for you too.