Does deferral affect credit score?
Technically, a deferral is not usually allowed in Australia. Actually, because of Covid-19’s effects on the economy and workforce, many people were forced to exit their jobs, leading to less income. Financial hardships are bound to happen in a thirty-year mortgage.
Thankfully, the government partnered with many banks and non-bank lenders to provide homebuyers and homeowners with a Covid-19 deferral program that lasts up to six months. Instead of decreasing the monthly repayment, a deferral instead pauses payments for a short time, which does extend the time on a loan.
It is not good to stop repaying loans, while this is true, a deferral does not affect your credit score. The government of Australia and banks/lending facilities came to an agreement that credit scores will not be affected by approved deferrals. Banks and lenders won’t report deferrals on loan repayments to the credit bureau if they have been approved ahead of time.
Although this is the case, if you miss payments after the deferral terms, it will count against you! Mortgage House experts understand that hardships can cause delays in repaying home loans. They offer their expertise and can provide valuable information pertaining to grants and programs that help homeowners with financial troubles.
Deferral Affecting Credit Score Conclusion
Homebuyers and homeowners can breathe a sigh of relief knowing that deferring their repayments on a home loan won’t affect their credit score. If a financial hardship has hit your life, contact Mortgage House experts for solutions!