Deferring Mortgage Payments. (Covid-19)
Stephanie Barritt • March 24, 2020
In response to the Covid-19 crisis; for those individuals financially affected, banks and the government have announced that payment relief may be available for up to 6 months of deferred mortgage payments.
As information is changing daily, or hourly, if you have any questions, please contact me directly to discuss your financial situation. The following information is a general guideline, each lender deals with things a little differently. So, here’s what you need to know.
Do you qualify for deferred payments?
Just because lenders are offering deferred mortgage payments, doesn’t mean you will qualify. Lenders are looking at each case individually and will only offer deferral upon their sole discretion. If you haven’t experienced income disruption, you won’t be eligible for payment deferral.
To qualify, you will have to prove not only that you have been directly financially impacted by Covid-19, but that you have no other means of making your mortgage payments. In other words, you have to prove genuine financial hardship.
Before making an application to your lender for deferred payments, you should consider applying for EI and continue making your payments as scheduled. Good advice is only to contact your lender if you have an immediate need and you would otherwise default on your payments.
Deferred doesn’t mean free
To be clear, deferred does not mean free. If you defer your payments for up to 6 months, you will still be responsible for paying that money to the lender. In fact, at most lenders, deferred payments could be added on to the principal mortgage amount and could incur additional interest.
Once your payments are resumed, they might increase your regular payment to maintain your existing amortization schedule.
Applying to defer your mortgage payments
If you are in a place where your only option is to defer payments, so you don’t get behind or default on your mortgage, you should contact your lender directly. Should you call and not get through, consider sending an email. Here is a template for you to follow. Edit as required.
Subject: “your name” & “mortgage #”
My name is “your name”. I would like to inquire about mortgage payment relief. My income has been disrupted by the Covid-19 virus, and I have limited means to make upcoming mortgage payments.
My address is “insert address”, and my contact information is “provide the best way to contact you”.
Please advise of the next steps.
“your name.”
Will deferring mortgage payments impact your credit score?
The simple answer is, no. A lender approved deferral is not like missing a mortgage payment. However, if you don’t communicate with your lender and just skip a payment, it could negatively impact your credit score.
Now, the truth is, payment deferral shouldn't impact your credit score, BUT, in these unprecedented times, and with the overwhelming number of deferral applications and banks having never handled anything like this before, it wouldn’t be a big stretch to imagine that mistakes could be made. Misinformation could get misreported to the credit bureaus.
Other mortgage options
Payment deferral isn’t the only option you have at this time. You may qualify for any of the following:
A mortgage refinance
Restoration of your original amortization (to lower your payment)
Hold a payment (during a temporary suspension of income)
Negotiated reduction of payments
If you are in a place where the Covid-19 has financially impacted you, and you need someone to discuss all your options - including deferring payments, please contact me anytime.
Let's discuss your financial situation and work together on a plan to get you through this!
RECENT POSTS
Summer in Canada is short—but sweet. With warm weather and long evenings, it’s the perfect time to get outside and enjoy your outdoor space, no matter how big (or small) it is. Whether you have a tiny patio or a sprawling backyard, a few creative upgrades can go a long way toward turning your space into your personal summer oasis. Below are ideas for every type of outdoor space, from cozy balconies to large backyards! For Patio-Only Spaces Limited to a balcony or concrete patio? No problem! Small spaces can still offer big enjoyment. 1. Upgrade the Flooring Add interlocking tiles to give your concrete floor a more polished look—wood grain, grass panels, or composite styles are all popular, easy-to-install options. 2. Create an Outdoor Movie Zone Hang a pull-down screen or grab a portable stand, pair it with a mini projector, and voilà—your very own outdoor movie theatre under the stars! 3. Start an Herb Garden Railing planters are perfect for growing basil, mint, parsley, and more. Fresh herbs at your fingertips—and they smell amazing too! 4. Add Some Twinkle Wrap fairy lights around your railing or overhead beams to bring cozy vibes and nighttime charm. 5. Grill Like a Pro Maximize your BBQ season with a compact baby-que. Weber’s Q Series is a great option for small spaces without compromising grilling power. For Small Yards A little yard can still pack a lot of personality. Here are ways to make the most of every square foot: 1. Game Time! Add a mini putting green or an axe-throwing target (just be safe!) for quick bursts of backyard fun that don’t take up much space. 2. Warm Up Your Nights Add a heating lamp or portable fire bowl to keep your evenings cozy well into the fall. 3. Grow Your Own Produce Build or buy a raised garden box to grow tomatoes, cucumbers, lettuce, or other easy vegetables. Gardening is relaxing—and delicious! 4. DIY Bird Bath Make a pedestal bird bath using an old vase, a platter, and strong glue. You likely have everything you need already at home—and the local birds will thank you! For Big Yards If space isn’t an issue, the sky’s the limit! Here are some larger-scale projects to take your yard to the next level: 1. Build a Catio Yep, it’s a “cat patio”! Give your feline friends a safe way to enjoy the outdoors with a screened-in enclosure attached to your home. 2. Create a Permanent Fire Pit Use stones and a fire ring to build a beautiful, safe fire pit. You can even add airflow cutouts to reduce smoke—perfect for those marshmallow roasts! 3. Tile a Dining Area Install paving stones or tiles to define an outdoor dining space. Add a table, some string lights, and enjoy al fresco meals all summer long. Need More Inspiration? If none of these projects quite fit your vision, check out Home Depot’s DIY backyard ideas—complete with step-by-step instructions and material lists to help you bring your outdoor dreams to life. Soak It Up While It Lasts No matter the size of your space, there’s always something you can do to enhance your outdoor experience. So get out there, get creative, and make the most of these sunny summer days. See you back here in August—with more tips, tricks, and homeowner insights!
If you’re like most Canadians, chances are you don’t have enough money in the bank to buy a property outright. So, you need a mortgage. When you’re ready, it would be a pleasure to help you assess and secure the best mortgage available. But until then, here’s some information on what to consider when selecting the best mortgage to lower your overall cost of borrowing. When getting a mortgage, the property you own is held as collateral and interest is charged on the money you’ve borrowed. Your mortgage will be paid back over a defined period of time, usually 25 years; this is called amortization. Your amortization is then broken into terms that outline the interest cost varying in length from 6 months to 10 years. From there, each mortgage will have a list of features that outline the terms of the mortgage. When assessing the suitability of a mortgage, your number one goal should be to keep your cost of borrowing as low as possible. And contrary to conventional wisdom, this doesn’t always mean choosing the mortgage with the lowest rate. It means thinking through your financial and life situation and choosing the mortgage that best suits your needs. Choosing a mortgage with a low rate is a part of lowering your borrowing costs, but it’s certainly not the only factor. There are many other factors to consider; here are a few of them: How long do you anticipate living in the property? This will help you decide on an appropriate term. Do you plan on moving for work, or do you need the flexibility to move in the future? This could help you decide if portability is important to you. What does the prepayment penalty look like if you have to break your term? This is probably the biggest factor in lowering your overall cost of borrowing. How is the lender’s interest rate differential calculated, what figures do they use? This is very tough to figure out on your own. Get help. What are the prepayment privileges? If you’d like to pay down your mortgage faster. How is the mortgage registered on the title? This could impact your ability to switch to another lender upon renewal without incurring new legal costs, or it could mean increased flexibility down the line. Should you consider a fixed rate, variable rate, HELOC, or a reverse mortgage? There are many different types of mortgages; each has its own pros and cons. What is the size of your downpayment? Coming up with more money down might lower (or eliminate) mortgage insurance premiums, saving you thousands of dollars. So again, while the interest rate is important, it’s certainly not the only consideration when assessing the suitability of a mortgage. Obviously, the conversation is so much more than just the lowest rate. The best advice is to work with an independent mortgage professional who has your best interest in mind and knows exactly how to keep your cost of borrowing as low as possible. You will often find that mortgages with the rock bottom, lowest rates, can have potential hidden costs built in to the mortgage terms that will cost you a lot of money down the road. Sure, a rate that is 0.10% lower could save you a few dollars a month in payments, but if the mortgage is restrictive, breaking the mortgage halfway through the term could cost you thousands or tens of thousands of dollars. Which obviously negates any interest saved in going with a lower rate. It would be a pleasure to walk you through the fine print of mortgage financing to ensure you can secure the best mortgage with the lowest overall cost of borrowing, given your financial and life situation. Please connect anytime!
