Lost your job and got a mortgage? Here’s how to take control

Coronavirus concerns around the world are causing people to panic about losing their jobs. If you do find yourself in this unfortunate position and you have a mortgage, try not to stick your head in the sand. Instead, get on the front foot with your lender and follow our 6 steps to not only survive, but thrive, in these challenging times.

Lenders have been very focused on doing the right thing by their customers since the Financial Services Royal Commission. This is great news for you if you do find yourself without a job but still with a mortgage to pay.

Most banks are offering repayment relief for up to six months for those suffering hardship due to coronavirus. They have also dropped their interest rates on a range of products after the Reserve Bank of Australia (RBA) cut its cash rate.

You might also be able to reduce your payments or access the funds in your offset facility fee-free. Other options to reduce financial stresses include restructuring and consolidating your loans fee-free and moving from a principal-and-interest loan to an interest-only loan.

If you have money in a term deposit, many banks will allow you to access these funds without incurring fees. Others are increasing the interest paid on term deposits.

Contact your bank’s hardship team in the first instance if you’d like to explore any of these options. They are geared up to deal with situations just like yours. They’ll want to work with you to find a suitable outcome, to keep you as a loyal customer through good times and bad. After all, this will benefit them too. The Australian Banking Association (ABA) CEO Anna Bligh stated on 5 April that consumers granted a six-month deferral of repayments due to the impact of coronavirus would “not have their credit rating affected as a result of that deferral, provided they were up to date with repayments prior to COVID-19. There may be other factors which can affect a customer’s credit rating, but customers accepting a COVID-19 loan repayment deferral can rest easy that the deferral will not be one of them.”

Some lenders may still require you to apply for a hardship variation once you’ve contacted your lender’s hardship team. This means telling them about how much you currently pay on your mortgage, why you’re applying for a variation to your home loan, and how much you think you will be able to pay. Check out the Financial Rights Legal Centre’s sample letters if you need some help knowing what to write.

Your lender then has 21 days to respond. If you’re rejected, you can apply to the Australian Financial Complaints Authority to have the decision reviewed.

You’ll then be able to switch to paying a smaller amount if they give you the go ahead to vary your repayments. It’s likely your bank will set a date to review this situation.

From April 27th, existing income support recipients can access an extra Coronavirus Supplement payment of $550 a fortnight for six months. This is in addition to any existing payments for the JobSeeker Payment, Sickness Allowance, Youth Allowance, Parenting Payment, Partner Allowance and Farm Household Allowance, plus other benefits.

To be eligible as an individual, you need to be unemployed, receiving the benefits listed above or have had your work hours cut by more than 20% since January 1st.

To be eligible as a sole trader, your business needs to have been suspended or have experienced a 20% reduction since that time.

To find out more and to see if you’re eligible, go to the payment finder tool on Centrelink’s website.

You’ll likely have a bit more time on your hands while you look for a new job, so use it wisely.

It’s a great opportunity to slash your expenses. Look for special deals when you shop around - remember that switching your energy deals could save you a decent amount. If you’re currently paying interest on your credit card, see if you can find a cheaper deal on ClearScore.

Another way may be to refinance your mortgage - switching your home loan could save you thousands. However, they’ll want proof you’re in a secure job, so if you can, try to do this before you’re made redundant.

Try to see it as a challenge rather than a chore, and a way of taking a more disciplined approach to your finances that you can continue with once you find a new job.

A redundancy can be a moment to see your involuntary career break as an opportunity to expand your horizons. Think about making an appointment with a career counsellor who can help you work out what the best way forward is - it might be something you never even considered.

You might want to apply your skills to a different sector, or retrain and move into another field altogether. You can always look for casual work or find jobs in the gig economy while you get back on your feet. While you might feel the opposite, be positive: think of this as a new start rather than a step back.

Finally, make sure you’re looking after your physical and mental health while you’re off work. It’s a great idea to stick to a routine and maintain normality as much as possible. Try to wake up at the same time you normally would when you have a job and fill your day with things that need doing.

You can also approach looking for a new role in the same way - and with the same enthusiasm - as you would approach your regular job. Don’t forget to eat well, exercise regularly and keep in touch with friends and family.

That’s the best way to get back on track and stay on top of your obligations. As Homer Simpson might say – it’s a ‘crisitunity’ (a crisis and an opportunity rolled into one). You never know what doors might open if you take this in your stride.