It’s Easter, 2020 as I write this, and most of us are home. Close to two million people have been infected with Covid-19, and more than 100,000 have tragically passed away. It’s hard to see when things will go back to ‘normal’. It looks like Australia’s borders will be closed until at least the end of the year. Every media source I look at talks about how hard these things are to predict.
Yet many of us are asking ‘What happens next?’
While none of us can say how long this pandemic will last, or what the world will look like when it is over, we can take a look at what happens, on an individual level, if homeowners take up the banks’ offer we explored in the previous post.
There, we looked at three different scenarios: 1) paying principal and interest (P&I) like usual, 2) paying interest only and 3) the so-called ‘pause’. And we saw how ‘pausing’ your home loan can actually end up a lot more like pressing ‘rewind’.
But how substantial of a ‘rewind’ is $6,246, like we saw in the previous post? It doesn’t sound like a huge amount, in the scheme of things – not when we’re talking about sums of close to half a million dollars (based on a mortgage of $400,000). But the long-term impact can be enormous.
Continue reading “What happens next?”