COVID-19 & How does a mortgage payment deferral work?You're watching this for one of two reasons...
1) Your income has been reduced because of the COVID-19
2) You want to prepare, but your income hasn't been affected yet
I discuss both these options:
1.COVID-19 Has affected your income!
You or a member of your family has been affected by the COVID-19 virus, then every mortgage lender in Canada are offering options mortgage payment deferral options.
Payment deferrals range from 1 to 6 months. Each lender is different, so speak with your lender to discuss solutions specifically to your situation.
How do you get the deferral? Your first option is to call them. I will provide a list of most lender's phone numbers for your reference, at the bottom of this summary
The lender phone lines are very busy so call early in the morning or later in the day (early evening), when fewer people are calling. If you can log into an online portal provided by your mortgage lender, you may have an option for deferring the payment without talking to anyone. You could do that, then you can wait until things have settled down in a week or two before you call your further mortgage payment deferrals.
How will a payment deferral affect me?
I discuss how mortgage payment deferral works assuming your payment is $1750/month and the interest portion is $1,000 per month. I review a basic calculation, then review a mortgage comprehensive example showing 300 payments and how the deferred payment extends the overall amortization.
One skipped payment could extend the mortgage live by almost three months.
If you increase the payments after the deferral or make a lump-sum payment, then the original amortization could be maintained.
2. What if your income hasn't been affected yet, but you want to prepare.
If you are still working, or if you are still receiving the same income but want to put yourself in a better financial position to weather potential future issues, then you have a couple of options.Consider Lowering Your Mortgage Payments
Your mortgage is likely your largest monthly expense. There are ways to reduce that payment. First, you could compare the interest rate you have with what's available today. By reducing your interest rate, you can save hundreds per month in mortgage payments.
For this type of situation, it's important to look at your costs and the penalty to make sure you will recover your costs.
I have a calculator that you can use to do that:
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Consider a Home Equity Line of Credit
If you already have a great rate or if the penalty to break the mortgage and to set up a new one is too big, then another option would be to set up a Home Equity Line Of Credit.
You may be able to set up a Home Equity Line of Credit (HELOC) so that you have access to some of the equity in your home. Home Equity Lines of Credit will typically offer lower interest rates than personal lines of credit or personal loans. By setting up the HELOC, you will have access to cash at better rates so that you can supplement your income if it's affected in the future.Refinance your mortgage to consolidate debt
If you have credit card debt, lines of credit and personal loans. It may be worth it to refinance your mortgage (and pay the penalty, if there is one) to bring all your payments into one. Mortgage interest rates are at historic lows and consolidating debt could help you to reduce your monthly costs and improve your cash flow so that you can weather a financial storm.
Whenever you do a debt consolidation loan, I highly recommend that you also review your cash flow. To make a consolidation effective it's important to review your spending habits. I posted a video on YouTube that describes how to review your cash-flow without having to do a "budget".
You can watch that here.
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Summary
In these unprecedented times, it's important to be cautious with your health and your finances. These options provided in this article can help you with your mortgage finances.As promised, here is the list of lenders and numbers.
ATB 1-800-332-8383
B2B 1 800 263 8349
BMO 1-877-895-3278
Bridgewater 1-866-243-4301
CIBC 1-800-465-2422
CMLS 1-888-995-2657
Optimum 1-866-441-3775
Equitable 1-888-334-3313
Connect First 403-736-4000
Chinook Financial 403-934-3358
First Calgary Financial 403-736-4000
First National 1-888-488-0794
Haventree 1-855-272-0051
Home Trust 1-855-270-3630
HSBC 1-888-310-4722
ICICI 1-888-424-2422
Manulife 1-877-765-2265
MCAP 1-800-265-2624
Merix 1-877-637-4911
Marathon 1-855-503-6060
National Bank 1-877-281-0144
RBC 1-866-809-5800
RFA 1-877-416-7873
RMG 1-866-809-5800
Scotia 1-800-472-6842
Servus 1-877-378-8728
Street Capital 1-866-683-8090
TD 1-866-222-3456
Stay safe & healthy and practice social distancing.
Steven Crews, Paragon Mortgage Inc
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#StevenCrews #MyMortgageBroker
