As the 6 month deferral of loan repayment period comes to an end, many borrowers are facing difficult choices. Almost half a million Australian borrowers chose to defer loan repayments during COVID19. After talking to many borrowers it is evident they are somewhat unaware of what they have done, many believe they were pausing their loans, this is mostly incorrect. What the loan deferral is for most is capitalisation of the repayments, being the repayments are added to the debt, extending the life of the loan. Let's make this clear right now, this isn't a bad choice for the borrower given the circumstances.
Where to now? If you can afford it, resume your payments. If you can only partially afford, maybe consider interest only or refinance to a longer term* (this may be problematic if you don't qualify for refinance) if you simply cannot afford anything and your prospects are not good, it may be time to consider selling your property. Selling your property before any stampede of forced sales occurs would be strategically wise. Most importantly communication is the key! speak with your bank, seek financial counselling if needed and of course speak with your broker about your loan options. A good broker will be the best source of inf
ormation and options for you.