The development of COVID-19 (aka Coronavirus) as a global pandemic has brought with it a wave of social panic, employment disruption and financial market volatility. While some people are going overboard on toilet paper purchases, others are preparing for the possibility of self-isolation, and the myriad financial complications that could accompany this and other impacts of the constantly shifting economic and political landscape.
We’ve been diligently keeping track of how Coronavirus might affect your bank balance, and we’ve come up with a few tips to help you stay in the green while red alarms sound across the country.
1. Take advantage of the recent RBA cuts and look at refinancing your home loan
Home loan rates are at an all-time low after the RBA cut rates to 0.5% in March, with 35 lenders (including the big four) in Mozo’s database last week announcing their intention to pass on the full rate. So savvy homeowners might put their energy into refinancing this month.
Refinancing your home loan is essentially shopping around for a more favourable interest rate or flexible loan features. It isn’t for everyone though. If you own less than 20% of the property (i.e. you have a loan ratio value over 80%), switching may cost you more than it provides as it’ll require a second round of lenders mortgage insurance. There’s also a range of fees involved in breaking certain loans and hooking up with new options, so read widely and come armed with info from our home loan refinancing comparisons.
2. Or, talk to your bank about a mortgage repayment 'holiday' if you're unable to work due to the pandemic
Unfortunately, people in certain industries aren’t able to take their work home with them. Many casual workers also don’t have leave entitlements, and other workers may have to take unpaid sick leave.
If you find yourself in this situation and you’re a mortgage holder, this could spell big trouble for your loan repayment plan. Happily, there are some things you can do to take the pressure off. While wide-scale mortgage suspensions aren’t currently in effect in Australia, some of the big banks are already offering assistance packages for those financially impacted by the virus.
Getting on the phone and having a chat with your home loan provider is a great way to figure out what you could be eligible for. If your income is substantially reduced when having to self-isolate because of the virus, a mortgage holiday - when repayments are paused due to job transition periods or unforeseen illness and injury - is a possible short term solution.
3. If you can work from home, find a fab new energy deal to run your personal office
As more cases of Coronavirus are being reported across Australia many companies are choosing to close their offices for the 14-day virus incubation period, and are asking those who can to continue work while self-isolating. This means all the energy you normally enjoy at the office will come out of your home.
So, why not take this moment to reassess your provider and make sure you’re getting the best deal while using your lights, kettle, internet connection and computer for an extra eight hours a day? Our handy energy provider comparison tool will help you find the best plan for your home.
4. Consider a term deposit to keep that nest egg safe and warm
While the interest rate cut has spelled bad news for growing your rainy day fund in many savings accounts, a term deposit may be a safer haven for your nest egg in 2020. It’ll let you squirrel away your acorn savings stash for a set period at a set interest rate, ensuring your money grows to its full potential in these unstable times.
Term deposits are relatively low maintenance - although some come with minimum deposits and other requirements - and since you can’t access the growing funds for whatever decided time period you chose (perhaps six months or one year), they can help you reach those long-term savings goals. Naturally, this is also the catch. Be very sure you have enough funds across your accounts and income to keep things rolling smoothly while a portion of your savings are on a little term deposit holiday.
5. If you have international travel plans, look at locking in a currency exchange rate before the Aussie dollar plummets further
Prospective holidaymakers mightn’t be investigating upcoming trips due to travel bans and lockdowns across Europe, the US, Asia and beyond, but if you’ve already got tenable travel plans in place, you’ll want to make the most of a difficult situation.
The RBA recorded the Aussie dollar sitting at 0.6457USD as of yesterday (March 12), continuing its decline. Locking in an exchange rate on a prepaid travel card is a way to mitigate further damage to your stockpile of holiday funds that exist as Australian dollars.
These products allow you to load multiple foreign currencies while at home and abroad, maintaining the same exchange rate you locked in upon opening the account. They function similarly to your standard debit card, but can give you peace of mind in what is otherwise a rather stressful time to be a traveller.
But as with any financial product, prepaid travel cards can come with various fees, across ATM use, reloading, cross currency and closure, so you’ll need to weigh all this up against the potential benefit of maintaining current exchange rates.
For more finance fixes, find all the latest money news, tips, guides and comparisons in our banking hub.
Refinancing home loans 2020 - last updated January 16, 2021
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