Ways you can ease mortgage stress during COVID-19

You don’t usually think of debt as being a good thing, but when it comes to your mortgage, it can be. Having a mortgage allows you to accrue and pay off a debt so that one day, you can own an asset with the potential to increase in value.

Unfortunately, in times like these, the stress of repayments can make it hard to see that elusive light at the end of the tunnel. With up to 1.7 million Australians facing the possibility of job loss in the next quarter as a result of COVID-19, many Aussies are desperate to know where they can turn for financial help.

Here are some ways to ease the financial burden of your mortgage amid COVID-19.

What to do if you’re struggling to make mortgage repayments due to the coronavirus

Check with your bank

In recent weeks, the Big Four banks have all announced hardship support packages for their mortgage customers. This comes in the form of a pause or deferral on payments with CommBank, Westpac and NAB, and a reduced variable home loan rate with ANZ. Check with your relevant bank for a more detailed breakdown of these provisions.

Additionally, if you have a small business, there are similar measures in place that can help ease your overall financial burden. Although this is not directly related to your mortgage, it is wise to take advantage of any support that can put you in a better position.

Find out if you’re eligible for government assistance

Throughout the COVID-19 pandemic, the Australian government has announced a whopping $320 billion in stimulus packages to help support the economy. 

Amongst this is a JobKeeper payment of $1,500 per fortnight for up to six months for employees, who have been stood down during the pandemic. With the loss of income being front of mind for many Aussies at the moment, having financial support can really help you keep on top of your repayments.

Eligibility for government payments will vary by package, so make sure you check which one best applies to you based on your personal circumstances. Most importantly, don’t be ashamed to ask for help. In such unprecedented times, any opportunity to improve your financial situation is worth taking.

Refinance your mortgage

We have recently seen a record low cash rate of 0.25% and many banks have passed the cut onto their home loan customers. As a result, a number of banks are now offering lower interest rates to reflect the current economic climate.

Check your present home loan rate, and if that number starts with a ‘3’, you may be paying too much for your mortgage. Shop around for a lower rate with a ‘2’ at the front. 

For example, the average Aussie owner-occupier loan is $494,414. If the owner were to switch from the average variable rate of 3.90% to one of the lower rates on the market at 2.39%, their monthly repayments would drop from $2,332 to $1,925. Over the course of a 30-year loan term, they could save around $146,383.

Re-evaluate your finances

If you’ve done everything you can to get the best deal on your mortgage but still find yourself struggling with repayments, it might be time to look outside your home loan. Try to free up extra cash from non-essentials or other bills where possible and redirect it towards your mortgage repayments.

When it comes to saving money on your bills, mobile applications such as the Finder App will allow you to compare the products you are paying for and suggest ways that you could switch and save.

In terms of non-essentials, it can be hard making the decision to cut out those little luxuries but it’s important to remember that these are short-term measures that will put you in a better long-term financial situation.

Disclaimer: This is a general guide only and is not intended as a substitute for financial advice.

Written by:

Graham Cooke

Graham Cooke is the Insights Editor at finder.com.au where he drives consumer-focused research, and appears regularly on Australian TV and radio discussing issues of consumer interest. He is a graduate of Dublin Institute of Technology in Ireland and has over ten years of experience in analytics and writing.