How to manage your investment property loan through the coronavirus crisis

The owners of investment homes and apartments are potentially facing a double whammy from the coronavirus crisis. Not only are their tenants possibly facing hardship, affecting their ability to meet rent payments, investors’ themselves may face income declines thanks to the crisis.

The owners of investment homes and apartments are potentially facing a double whammy from the coronavirus crisis. Not only are their tenants possibly facing hardship, affecting their ability to meet rent payments, investors’ themselves may face income declines thanks to the crisis.

Even so, there are several strategies you can explore to help you meet your investment loan commitments. Below is some of the advice our expert brokers have been sharing with uno Home Loan customers.

Talk to your tenant

As a starting point, you can talk to your tenant if they tell you they are struggling to pay the rent or have stopped paying. A lower rent is better than no rent at all, so it makes sense to negotiate with your tenant about what they might be able to pay, particularly if they have been a good tenant who always pays their rent on time in the past.

Renegotiate a lower interest rate

uno mortgage broker Amanda Denham suggests asking your existing lender for a cheaper rate, which might make all the difference in helping you stay on top of repayments. If your home loan comparison rate doesn’t start with a 2, you may be able to get a better deal.

It’s also a good idea to find out if other lenders are offering better deals or other offers. Many lenders are currently offering generous cashbacks and in combination with a lower interest rate, this might just be enough to help you meet the loan costs for the next few months.

Switching to interest-only payments

Another possibility is switching to interest-only payments. While the rates on interest-only loans may be higher than principal and interest loans, your repayments are likely to be lower as you will not be paying off the loan balance or principal. However, at the end of the interest-only period your repayments will increase further to catch up the principal payments that were not made during this period. It will also mean that you will pay more interest over the term of the loan.

Everyone’s situation will be different, so it’s a good idea to discuss your next step with a mortgage broker that understands your situation and can calculate the impact of different strategies and help with negotiations with lenders.

Use your redraw

If you have been making extra payments on your loan, you might have funds available in a redraw facility, which you can access to help you keep meeting loan payments.

Another possibility is to see if you have borrowing capacity and equity in a different property – perhaps your home or another investment property – and use the redraw on that property instead.

Taking a Mortgage Holiday

As a last resort, banks are offering mortgage holidays on investment property loans as well as owner occupier home loans. But a mortgage holiday isn’t free money – any repayments you miss are added on to your loan. It means you might end up owing more on the loan when the crisis has passed, so it’s a strategy we suggest you analyse carefully. Read more about getting a mortgage holiday from your bank HERE.

Finally, keep an eye on the news and find out if your state government is offering any financial assistance for residential property landlords. The Queensland government, for instance, is offering relief on land tax.

If you ask your mortgage broker for advice and discuss whether these strategies are right for you, you’ll have a much better chance of getting through the coronavirus crisis without missing any loan payments.

You can reach one of uno’s expert brokers from 8.30am – 6.30pm Monday – Friday and 9am – 5pm on Saturday. You can reach us on 133 866 or by email on contact@unohomeloans.com.au

You can also contact us through our online portal https://unohomeloans.com.au/home-loans/#chat-with-expert

This information in this article is general only and does not take into account your individual circumstances. It should not be relied upon to make any financial decisions. uno can’t make a recommendation until we complete an assessment of your requirements and objectives and your financial position. Interest rates, and other product information included in this article, are subject to change at any time at the complete discretion of each lender.

* Three year fixed rate, owner occupier, P&I loan with a maximum LVR of 95% and a loan amount >$150,000. Lender rates and products may change. We cannot suggest you remain in or switch to any loan until we complete our assessment. Fees and charges apply. ^ WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rate is calculated on the basis of a loan of $150,000 over a term of 25 years. ± All loan applications are subject to uno assessment and lender approval. uno does not guarantee that it will be able to find a customer a better loan than the one they currently have or to save them money.