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What to do When Your Mortgage Holiday Ends


It’s been an unusual 12 months across the globe, and this time last year, most people would never have imagined that they would have ever needed a mortgage deferral.


In what was a very tricky time for borrowers, banks and lenders stepped up and offered their customers the opportunity to defer their mortgage payments until things turned around.


Now that the Australian economy is getting back on track, a lot of borrowers will be forced to make a decision as to what to do with their deferred mortgages.


These are some of the options for those who need to start making repayments.


Go back to Normal Repayments


If you’re in a position to do so, you can simply start making your regular mortgage repayments again. It’s important to note that the mortgage holiday was just that. A break. You will still have to pay the full loan amount plus interest back to the lender. Getting started again is a good idea if you’re in a position to do so.


Push Out Loan Term


If you have some income coming back in, but it’s not at the previous level, there are still some options. You could possibly adjust your loan term in a bid to lower your repayments in the short term. For instance, by changing a 25-year loan to a 30-year loan, your payments might come down. Just note that you could be paying more interest overall.


Get Another Deferral


If you are still not making enough to cover your repayments, it’s important that you communicate this to both your lender and your mortgage broker. Mortgage deferrals are at the discretion of the lender and it might be possible to push it out further.


Refinance


If you have an income coming in that will allow you to refinance, you might be able to lower your repayments. You could look at options like an interest-only loan for a period of time or you could even take up an introductory offer from a different lender. Again, talking to your mortgage broker is the best starting point.


Time to Sell


If you’re still in your mortgage holiday period, it might actually be a good time to sell your property. Across the country, many suburbs and areas are seeing very healthy demand and good prices, so selling your property is an option. It’s worth assessing all the possibilities before going down this path, but if you’re not confident that your income can recover, this is still a viable option.




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