What if I can't pay my mortgage?
These are unprecedented times and this is a question I am getting asked a lot. Hard-working, responsible people are finding themselves temporarily unemployed, sick or unable to work due to family obligations. If the coronavirus or COVID-19 has you worried about how you’ll pay your mortgage, there are options available to help support you during this difficult time.
Canada’s banks, the federal government and the Canada Mortgage and Housing Corporation are stepping in with relief in the form of a six-month mortgage deferral program.
Here’s what you should know.
What is mortgage deferral? And how -could it help me?
A mortgage deferral is an agreement between you and your lender that you will suspend your mortgage payments for an agreed-on, temporary amount of time. Private lenders operate differently than the banks and you will need to contact your individual private lender for payment arrangements if you feel you are unable to make your mortgage payment.
Once a mortgage deferral ends, your mortgage payments go back to normal and the missed payments, including principal and accumulated interest, are repaid.
A mortgage deferral can be helpful when you are facing a financial hardship, like unemployment or reduced employment due to COVID-19.
What is the mortgage relief offer?
The mortgage deferral offer is a pause on mortgage payments themselves, not a forgiveness of the overall mortgage obligation, which means that interest will continue to accumulate and be added to your debt. In some cases the interest will be compounded. There may also be options available to pause your mortgage credit protection insurance premiums.
Am I eligible for mortgage payment deferral?
The program is being administered on a case-by-case basis to individuals whose mortgages are in good standing, and will be available until at least June 30, 2020. I have been hearing from many people that it can be extremely difficult to reach anybody at their bank at all. If that is your case and you need emergency mortgage assistance, you have other financial options. Contact us at 519-755-1904 to discuss your options.
Should I defer my mortgage payments?
Individuals considering this option should give it careful thought: think about how it will impact their own situation and recall that the program is designed to alleviate temporary hardship due to the impact of COVID-19. Depending on the current position of your finances, it may be better to continue with your mortgage payments. If you think your unemployment or debt situation could be longer term, you might wish to discuss other options that may be available. Other options could include taking the equity out of your home. Call us to discuss your options. We are here to discuss your particular situation and help you. 519-755-1904
What should I consider before deferring my mortgage?
In order to determine whether the mortgage deferral program is for right for you, consider the following:
Your current spending. Now is a good time to make a distinction between what is discretionary and what isn’t, what you have to pay for and what you can get by without.
All of your debts. From your mortgage to your credit card bills, make sure you are prioritizing your debt properly. Cash saved by not paying a mortgage could, for instance, go towards paying down credit cards, even just the minimum.
Are other bills being deferred during this period, such as property taxes? You may also be eligible for other COVID-19 government relief programs.
Check your cash flow and see what you are expecting to receive in the near future.
If you really are in a predicament because of the COVID-19 crisis where the disruption of cash flow is preventing you from making a mortgage payment, a deferral might be your best route. If you are unable to defer your mortgage or this is not an option for you, contact us to discuss your other options. We are here to help you get through this. 519-755-1904
What can I expect at the end of my six-month mortgage deferral term?
When things do get “back to normal,” remember that the total amount owing on your mortgage will be higher, due to the interest that has accrued. In that case, you might wonder how you will “catch up.” In the case of some banks (you need to check with your particular bank), your payments will be adjusted automatically at the start of your next term or, if you change anything else before renewal, at that time, to ensure your mortgage is paid off at the end of your original amortization period.
You can speak with your financial provider to see what other options may be available, including the potential for a lump sum payment or increasing your payments to help you get back on track sooner.
How do I apply for mortgage payment deferral?
If you think a deferral of payments may be right for you, you will need to try to reach someone at your bank. If you need other Emergency Mortgage Financial Assistance, contact Elizabeth at Boss Mortgages The Mortgage Centre at elizabeth@BossMortgages.ca or 519-755-1904. As a Principal Mortgage Broker and Accredited Financial Counsellor Canada ®, she is able to to provide FREE advice for your particular situation.