The head of Australia’s finance and mortgage broker peak body has welcomed the Federal Government’s extension of stimulus packages but has also urged borrowers on a bank payment holiday to prepare for payments to restart.

Managing director of the Finance Brokers Association of Australia Peter White AM says banks have supported borrowers impacted by COVID-19, but it won’t last forever.

“The reality is that despite government assistance, some people may not see secure employment or their business recovering in the near future, and the recommencement of mortgage payments will be a burden they cannot bear.

“If you feel that your situation is such that you will not be able to meet ongoing repayments, now is the time to consider your options,” he urged.

The first step is to see a local mortgage broker who can discuss options with the borrower’s best interest being first and foremost, and Mr White revealed brokers across the country are reporting a significant increase in these types of enquiries.

However he warned that many lenders won’t consider refinancing a borrower under a bank stimulus program.

It may be that the best option for those with no likelihood of a job is to sell their house, put some money in the bank, rent for a while and buy again when their situation improves, according to the 40-year industry veteran.

“For some, the alternative is defaulting on their mortgage, the bank taking possession and walking away with no money and a bad credit rating.

“You are far better off to be in control of your destiny than allowing the bank to take control as they will act in their own interest and that of their shareholders.”

If borrowers make the tough call too late, houses may be more difficult to sell and sale prices lower, therefore the loss could be much greater, Mr White explained.

“There is no advantage in holding off and hoping, when we don’t know what the market will likely be after the stimulus payments stop. There may be a glut of property suddenly on the market.”

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Peter White’s advice for borrowers unsure if they can meet repayments when they recommence:

1) Immediately see a finance and mortgage broker and discuss refinance options.

2) If there are no options available, talk to your bank and ask for an extension of the payment relief.

3) Act quickly and control your destiny. If you don’t believe your situation will improve, consider selling sooner than later.