If you’re like most people, you’ve been glued to the television and the news for weeks now. You’re certainly not alone, Canadians are concerned and rightfully so. We have never experienced such uncertainty and we want answers.
The Canadian government has certainly stepped up and is providing assistance to Canadians and has asked the banks to do the same. While we are hearing a lot about mortgage deferral programs on news reports as a solution. What we haven’t been hearing is what exactly this entails and how this will impact your finances.
Number one, you have to understand that there is no loan or interest relief. Covid 19 and it’s impact on our lives does not warrant mortgage forgiveness. Banks and financial institutions have the right to receive timely mortgage payments.
The other part of this that isn’t being televised is that you will be asked to provide proof of financial hardship. You will need to prove that your income had been significantly disrupted by Covid and that you have no means to keep up with your payments. You will be asked to exhaust all options before you are approved.
And lastly and perhaps the most important factor is that if you do decide to defer your mortgage payments, you will pay interest on top of the interest that you already pay on your mortgage. You read that right, its interest accrual. And this should make you think twice about what you plan to do about your mortgage.
It’s not all doom and gloom, however.
The good news it the there are options. Banks and lenders are offering different solutions such as refinancing, a home equity loan or a line of credit as solutions. You may in some cases be able to lower your payment by changing the terms of your mortgage.
So whatever you do, make sure you look at the options in great detail before making a decision. Go to the cheapest option of borrowing and ensure you are well informed.