Over the last few weeks, we have seen the world shocked by COVID-19. We are living in extraordinary times with countries going into lockdown, self-isolation becoming more important, grocery stores having bare shelves and people uncertain about what the future may hold for them, especially surrounding job security and finance security.
We have pieced together with our panel of expert’s answers to a few general questions that may help you through this time of shock and uncertainty.
What happens if I lose my job and cannot pay my mortgage?
This is a terrifying reality at the moment. Some industries are being affected more than others such as hospitality and tourism along with families that due to illness of a child or family member need to self-isolate and only have a certain number of paid leave or sick leave and may lose their job due to this.
Governments, Cabinets, Parliaments across the world do not want to see people lose their homes during this time with some even implementing 3-6 months of hiatuses for repayments.
In Australia, some lenders are presenting this option, however at the same time we have seen the RBA reduce the cash rate to 0.5 basis points with views that a reduction to 0.25 basis points, as soon as this Thursday 19th March is on the cards. This reduction in the cash rate has seen interest rates at their lowest however even with low interest rates if people lose their jobs, they may find it impossible to pay their mortgage, so what can you do?
- Double Check your finances
- Review what you are currently paying on your finances. You may find that you are paying higher rates across the board on your debts.
- You may find that consolidating debts into one repayment may assist you with budgeting.
- Check your insurances
- Review your insurance policies through superannuation, mortgage insurance and other insurances you may have such as income protection. You may find that you are covered for a period of time for mortgage repayments.
- Contact your bank manager or your mortgage broker
- Most lenders have hardship or repayment holiday periods in their mortgage agreements with you. Lenders do not like to foreclose on property, you will find more often than not and especially given this unusual global crisis event they will want to work with you.
- Below is a list of common lenders and their hardship number for your quick reference, if you would like more information relating to your lender please contact us by using our contact link
|CBA||1300 720 814||ANZ||1800 252 845|
|Westpac||1800 067 497||NAB||1800 701 599|
Is refinancing with interest rates low a good idea?
The answer to this question is more about you than us as experts advising you. You need to always look at what is beneficial to you and your financial goals or ideals. The best way to do this is arm yourself with the tools and resources to make an informed decision.
Uncertain times bring doubt. We find ourselves looking at our spending habits and cutting back on non-essentials such as eating out, entertainment, social outings, however as humans it’s also natural to procrastinate during uncertainty. Old saying often come into play such as “Better to stay with the devil we know”, “Saving for a rainy day”.
In Australia the RBA recently reduced the cash rate to 0.5 basis point with indications that as soon as this Thursday 19th March they will decrease the cash rate to 0.25 basis points to assist with stimulating the economy during this unpredictable global crisis.
Looking at possibilities available to you is not harmful. You may find that your current lending is perfect for you or you may find that other options available to you could be more beneficial.
What stimulus incentives are available?
Right now we are in unprecedented territory with historical data showing something similar to what is happening now occurred in the era of World War 1.
The Government and Parliament have been in discussions relating to this acknowledging their main goal is for business within Australia to be maintained. They do not want to see unnecessary unemployment. They understand that this current crisis is temporary.
The Australian Government has presented a $17b Coronavirus Stimulus Package with four elements.
Around 6.5 million lower income Australians will receive a one-off $750 payment aimed at boosting domestic demand in the economy.
The payment will be made to all social security, veteran and other income support recipients and eligible concession card holders. This includes those on Newstart, those who have senior’s health cards, and families receiving family tax benefits.
Around half of those that will benefit are pensioners, understanding our elderly are at high risk under the corona virus.
Small to medium-sized businesses will receive up to $25,000 to cover the costs of employee wages and salaries, paid by the Australian Taxation Office based on tax withheld.
This measure will happen automatically based on the business activity statements lodged by business. About 690,000 businesses employing around 7.8 million people are expected to be eligible for this payment.
Business Incentive Package:
Understanding that the business package is only available for companies that employ personnel the Government still wants to promote sole trader business.
The government is allocating $3.9 billion in incentives to encourage businesses to spend. This includes increasing the instant asset write-off, by lifting the threshold to $150,000 (from $30,000) – and making more businesses eligible to use it. It will also introduce a time-limited 15-month incentive to invest, by accelerating depreciation deductions.
Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
Fund for severely affected regions
The government announced a $1 billion fund to support regions most significantly affected by the corona virus outbreak.
It says that those “disproportionately affected” include those heavily reliant on industries such as tourism, agriculture and education.