HAVE YOU RECEIVED A LETTER FROM YOUR BANK?
SPEAK TO YOUR LOAN GALLERY BROKER TODAY ABOUT ANY COMMUNICATION FROM YOUR BANK
Please be aware that many of our clients who are making “principal and interest” (P&I) repayments on their home loans are now receiving letters from their bank notifying them that due to COVID-19 the bank will be revising their repayments down to the minimum payment required, unless they specify otherwise. Even our own brokers are receiving them on their own home loans!
What does this mean for me?
Now this might be good news for you, but it pays to be careful, and consider how this may affect your loan in the short term and long term.
For example, let’s say someone has been making a monthly P&I repayment of $3,000 since the beginning of their loan. As interest rates have dropped recently, their P&I monthly repayment has remained the same, thus they have begun paying off more principal and less interest, reducing their overall loan term and saving themselves money.
How can this affect my loan?
Certain banks will now adjust their P&I repayment to be lower to reflect their minimum monthly repayment. This means that borrower will effectively take longer to repay the loan than they otherwise would if they’d stuck with their original repayment figure.
For those who are struggling to meet their payments during COVID-19, this is welcome news. But applying this across the board to clients who have not seen an income reduction could negatively impact them if they are unaware that it will now take longer to repay their loan – and therefore it will cost them money in the longer term.
What should you do next
Whether you receive a letter or whatever your circumstances, this is a good time to work with a professional and conduct a full review of your loan, and there are options available to you that will help alleviate some of the current uncertainty.
If you would like to speak to us, whether you have received a letter yet or not, please remember you can do so anytime, in complete confidence, and without any commitment to change your loan or do anything. We’re just standing by with good advice if you need it. We are here to help – always!
And needless to say, we offer you our sincere best wishes and hope you are well during this challenging period.
Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this article is correct as of the date of publication and is subject to change.