Because of covid-19 many banks are offering a 6 month Home Loan repayment deferral to help those with financial difficulties.
Question is, would taking up a 6-month deferral affect either one's credit rating, or at least future loan applications with the same bank? Forever on their system it would have a "asked for financial hardship assistance".
Any guesses? Anyone that works in Home Loans have insider knowledge?
Credit rating would only be impacted by the increase in the size of the loan at the end of deferral. And if you couldn't make repayments.
However in the new world of credit and privacy invasion you may well be asked questions about whether you have ordered UberEats or asked for assistance from a financial instition for hardship.
Under comprehensive credit reporting, a credit provider you are applying to has access to your full payment history for all the credit products you are liable for.
A 3-6 months gap in payments, while OK with your bank, probably won't look that great to another lender looking to start a relationship with you.
Two customers - one kept up their payments during the crisis. The other chose to defer their payments for a few months. If everything else were the same, then which of the two presents the lower risk?
Check your contract as you may be required to pay the interest in a lump sum once the deferral period ends, making it somewhat pointless if you don't have funds.
No. It is as if everything is normal.
Michael Yardley, one of those property investment educators, wrote this on his website
"…if you take a 6 month payment pause on your loan, then the interest still is charged and capitalised (or added) to your loan.
At the end of this period, then you will then be required to make your normal repayments, PLUS catch up those that you haven’t made over this time. It’s important to understand this."
I work at one of the big 4 banks and we are flagging each account who has asked for assistance and deferring their payments. This flag on the account will allow less negative impact to any future credit increases and loan applications within the same bank. If situations change for the better after 6 months, credit scores are not impacted.