What Are My Finance Options Right Now?

Financial Subsidies

The government are currently offering subsidy payments to businesses that have been impacted by COVID-19. There are currently two different options available:

Wage Subsidy: This subsidy is designed to help employers (including sole traders) to continue to pay wages and retain their employees if they have seen a downturn in business. To qualify, your business must have seen a 30% decrease in income during one month of the COVID-19 experience. There are options to apply for both part and full-time employee subsidies. The figures are set at $350 per week for part-time staff and $585.80 per week for full-time team members. You receive a lump sum payment that is designed to cover 12 weeks of support per employee.

Leave Support Scheme: This scheme is designed to help employers continue to pay their staff who are unable to work due to COVID-19. This could be as a result of the Ministery of Health guidelines or if employees are unable to work from home.

Please note that businesses can only apply for one of the subsidy options, so it is important to determine which is the best fit for your business.

If you are an employee who is facing reduced hours or redundancy, you cannot apply for the subsidy directly. However, you can encourage your employer to apply for the subsidy if they have not done so already.

Mortgage Holidays

Many people have found themselves on reduced income as a result of business closures and virus restrictions. If this is the case and you are finding it hard to meet your mortgage repayments, banks are currently offering various options.

The first is to convert your mortgage repayments to interest-only terms. This means that you do not pay anything off the principal amount of your loan, but also do not add to the value of your loan either as you still pay the interest portion.

The second option is a “mortgage holiday”. This is where you can defer the repayments on your mortgage for up to 6 months. Before rushing into this option, you need to think carefully about whether this is the right move. The repayment amounts do not simply disappear, rather they increase the duration of your mortgage and incur additional interest. In saying that, taking this option could mean that you protect your home.

If you are considering either of these options, we would encourage you to speak with a financial adviser, like the team here at Mortgage Suite. We can help you run some numbers and work out which is the best path forward for you.

Send us an email at info@mortgagesuite.co.nz

Rent Relief

There are currently no direct rent relief subsidies in place for commercial or domestic rents due to COVID-19. However, some landlords are receptive to individual requests if you approach them and explain your situation.

The government have put a freeze on landlords being able to increase rents or terminate leases during this time. There is also talk that they are working on solutions for commercial leaseholders, so we will watch this space intently.

The Economic Climate

Economists have been buzzing about what the long term impact of this global pandemic will mean for the economy. There is talk that the OCR may even drop to a negative figure in the coming months.

What we do know is that the Reserve Bank has decided to remove LVR (loan to value ratio) restrictions for the next 12 months. Before these restrictions were removed, banks were only allowed to lend a certain amount to borrowers who had less than a 20% deposit.

The recent changes will allow banks to assess the individual circumstances of “credit-worthy borrowers”, regardless of their deposit figure. [source]

As always, we strongly recommend anyone seek expert financial advice before making any decisions that could impact your personal or business finances.

The team here at Mortgage Suite are always on hand provide expert guidance and help at no cost to you. So please do not hesitate to contact us if you need advice.

We are continuing to operate at levels 2 and 3 while adhering to strict social distancing protocols. It is amazing what we can achieve via phone or video call!