Homeowners impacted by COVID-19 encouraged to contact lender

,

Homeowners who have had their income impacted by the coronavirus outbreak are being encouraged to seek out hardship options with their lender.

The economic impact of the coronavirus outbreak is evolving daily, if not hourly, across the Australian financial landscape.

Businesses have closed, jobs have been lost, and casual workers have had their hours slashed from work rosters.

If you’re one of the many Australians who have been affected – or are worried that you soon will be – rest assured that you can talk to your lender about hardship options without it affecting your credit report.

Here’s a statement released by Commonwealth Bank CEO Matt Comyn, for example:

“We encourage our retail customers who may be facing hardship due to impacts of the virus to contact us so that we can provide them with assistance, for example hardship options including deferral of loan repayments.”

What are some other options?

If you don’t believe you need to seek financial hardship, but you’d still like a bit of extra breathing room, it may be worth considering refinancing or renegotiating your home loan.

There have been four rate cuts in the past year – including one last month that reduced the RBA’s official cash rate to a record low of 0.5%.

And here’s the thing: lenders don’t automatically drop your repayments when the interest rate falls.

So if you haven’t asked your lender to reduce your home loan rate over the past year – or even the past month – then you may be able to reduce your monthly repayments by refinancing.

Get in touch

We understand that these are tough and uncertain times, yet rest assured we’re here for you no matter what lies ahead.

If you’d like us to help you explore either your hardship or refinancing options then please get in touch – we’re ready to assist you any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

SME owners impacted by coronavirus urged to contact creditors

, ,

SME owners concerned about the coronavirus outbreak impacting their cash flow are being urged to talk to their creditors as soon as possible.

Earlier this month the RBA cut the official cash rate by 25 basis points to a new record low of 0.50% due to the impact of the coronavirus outbreak on global financial markets.

And as the economic ripple effects of the coronavirus start to hit Australian businesses, financial and consumer law firm MyCRA Lawyers says the repercussions of not meeting loan repayments in a timely fashion could impact businesses for five years.

“The risk of an extended and prolonged economic downturn is real and affecting the entire economy,” says MyCRA Lawyer’s CEO Graham Doessel.

“The problem is even though the tourists and customers may have stopped, the bills won’t stop and that can mean defaults on people’s credit files.”

Mr Doessel says as soon as you are 14 days or more late in making a loan repayment it can go on your comprehensive credit file for two years.

“This will impact your ability to access credit,” Mr Doessel says.

“[If you] get a default or a court judgement on your file you will be feeling the financial symptoms of coronavirus for five years.”

What to do if your business is affected

Mr Doessel says if your business is struggling to meet its bills you should contact your creditors straight away and apply for hardship.

“Most lenders have a positive obligation to offer hardship in genuine cases. If you have seen your cash flow decimated due to coronavirus, reach out to your creditors and ask for some breathing room,” Mr Doessel says.

“Whatever you do, do not stick your head in the sand, because you can’t hide from your financial obligations.”

Mr Doessel adds that lenders and companies like Telstra, Optus, AGL and Origin Energy have hardship policies for genuine victims of circumstances beyond their control.

“Anyone who finds themselves financially affected by the virus should make a list of their bills and contact each credit provider – in writing if possible – to let them know the circumstances and to check no bills have gone unpaid,” he said.

“Most companies have the discretion to forgive a debt in extreme cases.”

Businesses impacted by the bushfires

The coronavirus outbreak comes as many Australian businesses are still reeling from bushfires.

Indeed, a NAB survey has found that two-thirds of Australian SMEs have been directly or indirectly impacted by the recent bushfires, with business disruption, higher insurance, and lower customer confidence cited as key factors.

“We know that many families and businesses face an uncertain future and we recognise the significant impact the fires have had on cash flow, loss of customers and supplier disruption,” says NAB Chief Customer Officer of Business and Private Banking Anthony Healy.

We’re here to help

There’s no doubt many Australian businesses are doing it tough right now – whether that’s because of the coronavirus outbreak or the summer bushfires.

If yours is one of them, please get in touch. We’re ready to assist you in any way we can and will work through your available options with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How long does it take to find and secure your dream home?

, ,

It takes most first home buyers longer than a full working week to house hunt and apply for finance for their ‘dream’ property, according to new research.

The 2020 St George Home Buying Survey found that it takes first-home buyers an average of 44 hours to research properties, hone in on one they like, and begin the home-buying process – including applying for a mortgage.

Why does it take that long?

Eight in ten people surveyed said they found the application process for a home loan time consuming and inconvenient.

What are they finding difficult about it? Well, more than half said they were ‘pained’ by the overall amount of information they need to process.

The other main hurdles facing home buyers included:

– Understanding what was involved (73% of people surveyed)
– Learning about the housing market (71%)
– Working out their financials (64%).

How we can help cut down that time

We go through this on a daily basis so we can help make the process a whole lot less time consuming, confusing and inconvenient for you.

We can help you understand what’s involved and help you work out your financial hurdles.

Don’t forget government assistance

On a related note, it’s worth noting that the federal government’s First Home Loan Deposit Scheme, which started on January 1, still has most of its 5,000 non-major lender scheme places available.

The scheme can allow first home buyers to purchase a property with a deposit of 5% without having to pay Lenders Mortgage Insurance (LMI).

To find out more, get in touch. We’re more than happy to run you through the scheme and how it may help you crack into the property market sooner.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Are you being stung by the loyalty tax?

,

Once upon a time you were rewarded for loyalty. But borrowers with older mortgages are typically paying a higher interest rate than customers on new loans, confirms the Reserve Bank of Australia (RBA).

The RBA’s study finds that the difference in interest rates between new and outstanding variable-rate home loans increases with the age of the loan.

For example, for loans written four years ago, borrowers are charged an average of 40 basis points higher interest than new loans.

“For a loan balance of $250,000, this difference implies an extra $1,000 of interest payments per year,” explains the RBA.

And for loans more than eight-years-old, on average, you pay about 60 basis points more than a new customer.

What’s driving the difference?

The RBA says the difference in rates between older and newer mortgages can be partially explained by a shift in the mix of different types of variable-rate mortgages over time.

“In particular, the share of interest-only and investor loans in new lending has declined noticeably in recent years and these tend to have higher interest rates than other loans,” the RBA says.

“Nevertheless, even within given types of mortgages, older mortgages still tend to have higher interest rates than new mortgages.”

Strong competition for new borrowers

Here’s the real kicker, though. With competition for borrowers intensifying over recent years, banks are offering large discounts on their standard variable rates (SVRs).

What’s an SVR? It’s the reference rate that a bank prices its variable-rate loans against.

Basically, it’s the interest rate that banks and media quote when they report whether or not a rate cut is being passed through to customers.

But, as the RBA points out, very few borrowers actually pay interest rates as high as the SVR.

Instead, most borrowers are on advertised rates that are “materially lower” than a lender’s SVR, or have negotiated a further discount – and those discounts are getting bigger and bigger each year.

“In recent years, the average discounts relative to SVRs offered by major banks on new variable-rate mortgages have grown, widening from around 100 basis points in 2015 to more than 150 basis points in 2019,” the RBA says.

“By increasing the discounts on rates for new or refinancing borrowers over time, rather than lowering SVRs, banks are able to compete for new borrowers without lowering the interest rates charged to existing borrowers.”

Time to renegotiate?

The discounts borrowers receive on loans are usually fixed over the life of the loan. However, the good news is that they can be renegotiated.

“Well-informed borrowers have been able to negotiate a larger discount with their existing lender, without the need to refinance their loan,” explains the RBA.

So, if you’d like to put yourself into the RBA’s “well-informed borrower” category, then get in touch with us today.

We’d be more than happy to help you refinance your home loan, whether that be renegotiating with your current lender or looking around elsewhere.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Credit scores set for Valentine’s Day boost

, ,

Tens of thousands of Aussies have an extra reason to love Valentine’s Day this year, with their credit scores set to jump after civil court filings disappear from their credit file.

According to consumer and financial law firm MyCRA Lawyers, the change will allow some people to get credit where previously they were rejected, or simply negotiate lower interest rates.

MyCRA Lawyers CEO Graham Doessel says for years borrowers have had their bank funding cut off or rejected because of trivial and vexatious civil court actions that judged them guilty until proven innocent.

“Now only judgments can be recorded on someone’s credit file and those judgments must relate to ‘credit’ to impact someone’s credit rating,” Mr Doessel says.

The end of weaponised civil court actions

Mr Doessel says the change will hopefully end civil court actions by ex-business partners, disgruntled employees and jilted lovers, who use civil courts as a weapon to cripple someone’s credit.

“We’ve had a client with a business employing 120 staff almost sent to the wall because of a trivial dispute with their pool repairman over $3000 that never even went to court,” explains Mr Doessel.

“Other common weaponised civil disputes are ex-business partners suing simply to dry up funding, or even spurned partners who are out to get their ex-lover’s business.

“It’s a victory for common sense.”

Credit reporters to look for loopholes

There’s just one catch, says Mr Doessel. Credit reporting bodies have traditionally reported this information and will still want to where they can, he adds.

“Credit reporting bodies will be reading this legislation as narrowly as possible. In our discussions with one body they are already interpreting the changes differently to us and believe this change only applies to consumer files, not commercial files,” explains Mr Doessel.

This means those with the most to lose, namely small business proprietors, potentially remain in the same predicament, says Mr Doessel.

“If this is the case – and we won’t know until after February 14 when the changes come into effect – then it renders the new laws almost useless because those most affected are small business people,” Mr Doessel said.

Final word

The new requirements come into effect on Valentine’s Day and will be retrospective, so people with a civil court default on their file that isn’t the result of a judgment and isn’t credit-related will have them removed.

If you believe these changes might impact you, then get in touch. We’d love to talk to about your options moving forward.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.