The current economic conditions caused by the coronavirus pandemic have left many unanticipated consequences. According to Australian Bureau of Statistics data, the unemployment rate has been rising since March, peaking at 7.5% in July.
At the beginning of the COVID-19 pandemic, financial institutions extended an olive branch to pandemic-affected customers in the form of mortgage repayment deferments. The deferments were originally scheduled to last until September 2020, but banks have agreed to extend the assistance for another four months to those who are still experiencing severe personal bankruptcy by then.
According to a recent survey, 40% of those planning to use the deferral extension overstated their income in their home loan application, while 15% understated their indebtedness. 67% of them are on JobKeeper, while 25% are on JobSeeker.
While this is a welcome relief for many in the meantime, such assistance will not be available indefinitely. Those who do not qualify for further extensions will be required to begin repaying their mortgage as soon as this month.
Steps You Can Take
Some people are in a precarious financial situation as the government reduces COVID-19 reliefs. Here are some things you can do if you are one of these people.
Refinancing Your Property
If you’ve been paying your mortgage for a while and there’s a lot of equity in the house, you might want to refinance it with your current lender to lower your monthly mortgage payments. You could even switch to a bank with a lower interest rate. It should be noted, however, that if you refinance your property and extend the term of your mortgage, you will end up paying more to your lender in the long run.
Sell your property
You could try selling your home and moving into a rental or a less expensive home. If you have a property with negative equity, meaning it is worth less than the mortgage, we can assist you in negotiating a settlement of the shortfall. We previously discussed how we assisted a client in resolving a mortgage shortfall here.
Make a deal with your creditors.
You may also want to work out a payment plan for the other debts to free up some much-needed cash. Tax debts, personal loan or credit card debts, and debts owed as a result of personal guarantees are examples of such debts.
For many years, we have assisted clients in negotiating settlements or payment arrangements with their creditors. These informal negotiations are the most cost effective and efficient way to compromise your debts.
Contact Us For Assistance
Apart from formal insolvency appointments, we provide a range of other services to help clients with cashflow issues or who are simply struggling to keep up with mortgage payments. Our team of Chartered Accountants and members of the Australian Restructuring Insolvency and Turnaround Association (ARITA) can assist you in weathering this storm. We also collaborate with finance professionals to provide you with a truly customized solution.
If you are affected by COVID-19 and find yourself unable to avoid personal bankruptcy, please contact our Brisbane or Gold Coast offices for a free, no-obligation consultation. Our knowledgeable staff will be able to explain and assist you with your options.
