Canadian Mortgage Deferrals - What You Need To Know

I'm still getting lots of questions about the mortgage deferral announcement and changes to our lending system amid this COVID-19 unrest.

Here's a summary of my recent FB live where I tackled these issues and more.

DEFERRALS:

INSURED MORTGAGES - LESS THAN 20% DOWN

(CMHC, Genworth, Canada guaranty)

Defer up to 6 months

Case-by-case basis

Not automatic - you must call your lender

UNINSURED BORROWERS

Big 6 banks have said they will work with borrowers

Call your lender

PRIVATE / ALTERNATE

Lender-specific terms and agreements

Call your lender

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WHAT TO KNOW:

Deferral does not mean you save that money or that interest. The deferred mortgage payments are being capitalized on to the principle and so you’re paying interest on it, in addition to your full mortgage balance.

Example: Payment $1700, 25yrs @ 2.99%

Deferring ONE payment will cost you *$1787* in interest over the term.

Calculator: https://www.rbcroyalbank.com/…/w…/skip-a-payment/index.html…

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OTHER OPTIONS:

- Access Equity: Short-term open options, emergency funding (48-72 hours) Ottawa has seen a boost in home values so many of you will have equity to access.

- Refinance: Reamortization of your mortgage period to increase cash flow. A case-by-case basis and depends on a lot of factors. It may not be the right move for everyone.

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WHAT THIS MEANS FOR RATES:

- Bond yields have gone up and fixed rates have gone up along with it

- Existing variable rates may see a drop in rate based on the prime rate posted by your lender

- New mortgages aren’t seeing those discounts

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FAQ

“Does deferring my mortgage payment affect my credit?”

No. Deferrals will not affect your credit, as long as the deferral is approved by your lender.

“Any info about the mortgage stress test?”

Stress test changes that were to take place April 6th has been postponed. We don’t have a new date yet

“If I pause my mortgage, will the term change?”

No, the term will remain the same but the amount owing at the end will be more.

“Are you seeing closing postponements on firm deals?”

Not yet. The only issue with postponement that I’m seeing is for overseas funding where buyers are unable to come and sign the paperwork.

“How quick can you get an application approved?”

We’re still working at the same capacity and we’re seeing approvals in 24-72 hours.

“Should I consider a home equity line of credit?”

If you are in need of cash flow AND have the equity built up, a HELOC is the lowest cost of borrowing as opposed to a traditional loan or using a credit card.

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For questions, emergency cash-flow or to access equity, please reach out: [email protected] or my cell (613) 276-2746

All of my services are available virtually! www.mortgageswithsue.com