Many Australians have started to budget for the next 6 months. Given that the Australian economy is in recession as a result of COVID 19, it’s wise to take advantage of every hand out or financial opportunity.
Michelle Baltazar, the editor-in-chief of Money, recently evaluated each bank initiative available during COVID 19. In the same article she also questions, could lenders do better given the dire (and ongoing) circumstances? Read on to find out How to take advantage of your banking options during COVID 19.
1. Many banks are allowing lenders to put their loan payments on hold.
If you are unable to make mortgage repayments because of COVID 19, you may be able to put your repayments on hold for 6 months. However, depending on your financial agency, you may be up for an increase in repayments in future or an extension of your loan term.
Whilst the hold on mortgage repayments is a relief during a hard and unusual time, Michelle questions if banks could take it one step further and offer a hold on interest over the 6 month period to avoid the potential increase in future repayments.
2. Are you ahead with your payments? If so you may be able to redraw on your loan.
Having access to cash during this time is comforting, however will it come with a fee? Michelle asks the question, why can’t banks waive the redraw fee during COVID 19?
3. Banks are offering competitive interest rates and the opportunity to switch and save money on your monthly repayments.
But why are all banks offering varied interest rates? If your financial agency isn’t the most competitive, you may be seeking to re-mortgage or switch your loan provider.
Michelle suggests that there should be a moratorium that all banks provide the same competitive rate cut so that everyone benefits, regardless of who they bank with. In addition, both variable-rate and fixed-rate interest loans should be negotiable, not just variable-rate loans.
Finally, Michelle suggests that banks should work with the government to find out how they can provide better repayment conditions for those who have lost their jobs during COVID 19. Reducing repayments may be a better alternative to putting repayments on hold completely.