What steps should I take if I am starting to struggle financially?
First and foremost, give your Entourage broker a call. We know your financial position very well, along with all your loan details. We can help you to run the numbers, present the options that are available to you and help you make an informed decision on managing your debt.
Steps to take
- Contact your broker. Everyone’s situation is different so talk to us first to find out if there are any other options for you prior to asking your lender to defer repayments.
- We can look to see if your repayment is set to the minimum amount required. Sometimes your lender doesn’t reduce your repayments when rates drop, so you may be paying more than the minimum amount required.
- Do you have redraw or offset funds? You can use these to help with repayments during this time.
- We can look at pricing your existing loan if on variable to see if your lender can offer a better rate and therefore reduce your repayment.
- If you then still decide that you would like to defer your repayments with your lender, you can contact them directly via the links we have provided in our blog ‘Emergency Relief Packages Offered By Australian Banks‘. Please note that they will likely ask for your financial position and expenses and income, so please be prepared with this information.
Will deferring my repayments affect my credit file?
The lenders have advised that deferring your repayments with them will not affect your credit file. As you are going into an agreement with them, it will not affect it. If you were to fall into arrears on your home loan though without any contact or agreement with the bank, that could then affect your credit file.
Will my loan still be approved at the moment?
A lot of clients have asked if loans are still being approved at the moment. Although we haven’t yet had any declines in our office due to this, some of the smaller lenders have come out and said that they are no longer accepting incomes from the industries that were closed down last week, So travel, hospitality, sporting clubs, pubs etc plus casual employee income. They are not looking to use any additional incomes like bonuses or commission. So based on this, we would strongly recommend anyone making offers at the moment to buy property should be including a finance clause for say 14 or 21 days. Try for 21 days if you can given the times that some of the lenders are taking at the moment. That way, if you are successful in purchasing the property but your finance is then declined for some reason, you are able to get out of the contract. Please obtain the correct wording to use on the contract from your conveyancer or solicitor around this.
Expenses and Budgeting
Our expenses during this time are likely to go down during this time because we aren’t out shopping, there are less visits to the beauty salons, no sports to bet on plus less trips to the pub.
If you want to take a look at your expenses you can log into your internet banking, filter your transactions for a month or a three month period for example. Some lenders have the options of exporting those transactions into an Excel spreadsheet. Once you have done that, you can then sort the transactions so that they all group together. By doing this, it will help to see where your money is being spent each month. Once you have gone over this, you might then be able to see where you can save or reduce your expenses. We also have a blog on our website for different Budgeting Apps if you are interested in using one those.
Communication is Key
If you are struggling to make repayments with your creditors, please keep the line of communication open with them. It’s always best to get on the phone and come to an agreement to pay off any debts, instead of burying your head in the sand as this can then start to affect your credit report. Please keep in touch with them, they are generally very friendly and willing to work with you to come to an agreement on how to repay your debt. Banks are also waiving some loan fees, and exit costs on term deposits so you can always ask the question if you do end up on the phone to them.
Government Support
Another thing to note that if you have lost your job or been made redundant, or you are a sole trader that has had your business suspended, you may be eligible for income support through Centrelink. They are offering an additional $550 per fortnight as a coronavirus specific benefit. Don’t be afraid to take advantage of this if you need to. It’s important to get all the help you can get in a time like this.
Superannuation
If you have lost your job, or have had income reduction, you may be eligible to access $10,000 from your Superfund this financial year, and $10,000 next financial year. Please do seek financial advice prior to doing this so that you are aware of any implications it has on your Super as this is your nest egg for retirement.
Ask for help
If you are struggling with repayments and need further support, you can contact
National Debt Helpline on 1800 007 007. You can also check out the
Moneysmart site which has lots of very useful information to help make smart money decisions.
Be wary
At times like these, unfortunately we see a spike in online fraud and scams. Please do not provide your account details via email to anyone if you are asked to confirm them. It is very rare that this would ever be requested from a bank. Please contact the provider via phone if you are unsure.
If you have any questions relating to the above or if we haven’t touched on something that you would like to know. Please
contact us and we would be more than happy to discuss with your over the phone.
Most importantly take care, be patient and we will get through this.
