I love FOMO but what does it stand for? FEAR OF MISSING OUT There's moving…
Think very carefully before taking a Covid-19 mortgage deferral!
These are very unsettling times. Financial pressure is almost certainly going to affect people, if it hasn’t already.
One option being considered by many is a mortgage deferral. However, what this does is shifts the problem from now to the future. And who has a crystal ball to know what that will look like!
Before considering a mortgage deferral, think about this:
Does the interest accruing cease? No
Does it cost more in the long run? Yes
Are there any other options? Yes!
According to Moneyhub, a six-month repayment day on a $500,000 mortgage at 4 per cent will add approximately $15,000 to the mortgage and this still has to be paid at some point.
The government has allowed banks to relax the rules for now, making it easier for borrowers to receive this help, but do consider all options first.
Here are some things you could do to ease the pressure:
- Mortgage deferral – not recommended due to the cost
- Interest-only repayments to decrease the payments
- Extension of the loan term to decrease the payments
- Get help with restructuring loans
- Consolidate loans to help make repayments more manageable
- Access short-term funding
- Lodge a KiwiSaver hardship application
Remember, the banks won’t lose money by helping you. They may even make more. If you want advice on any of this, please do get in touch.