Everything you need to know about deferring your mortgage payment
There is no doubt that the current COVID-19 situation is a serious health crisis. But for many Canadians, it is an economic crisis as well. As “non-essential” businesses are being ordered to close, and people are going out less because of social distancing, business is drying up for many and sadly, people are getting laid off as a result. Because of this many businesses – including lenders – are doing what they can to help. Canada’s major banks along with several other lenders are offering homeowners the opportunity to defer their mortgages. But what does this mean and is a mortgage payment deferral the right option for you?
What is a mortgage payment deferral?
Just like the name suggests, mortgage deferral is when your mortgage lender allows you to skip one or more mortgage payments without triggering a default or affecting your credit score. While interest does continue to accrue on your mortgage, it provides relief in a time of financial struggle because you have more money in your pocket to pay for other essentials such as utilities and groceries.
Should I defer my mortgage payments?
While deferring one’s mortgage payments is a good strategy for someone who really needs the help, it should be noted that it is not necessarily right for everyone. You should only do this if you truly need the help for circumstances such as a layoff or because you have added expenses (such as having to put more money into your business which is struggling to survive the COVID-19 crisis.).
If you have the ability to continue to make your mortgage payments without it causing undue hardship to yourself or your family, this is still the best option as it means that you will be able to pay off your mortgage sooner.
In making the decision on whether or not it makes sense for you to defer your mortgage payments, one of the best things you can do is to sit down with your mortgage broker. Your mortgage broker will be able to help you with the calculations and let you exactly what deferring your mortgage payments would mean for you in terms of cost and length of time added to your mortgage.
How can you inquire about deferring your mortgage payments?
If you are thinking about deferring your mortgage payments, it is important to speak to a qualified mortgage broker, such as Matrix Mortgage Global. Not only will your mortgage broker be able to give you important information about what it would mean for you if you deferred your mortgage, but they can also offer other solutions if you decide that a mortgage deferral is not for you.
Can you refinance your mortgage if you have deferred your mortgage payments?
As part of the effort to help Canadians cope with the economic impact of COVID-19, the Bank of Canada has lowered interest rates again. This makes it a great time to refinance your mortgage – and with Matrix Mortgage Global, you can refinance even if you have deferred your mortgage payments.
Refinancing simply means that you are breaking your first mortgage and getting a new one – usually at a lower interest rate. Getting a lower interest rate on your mortgage means that you can lower your mortgage payments and/or pay off your mortgage faster. With refinancing, you also have the option to consolidate your higher interest debt using up to 80% of your home equity.
How can you benefit from this plan?
Whether you are deferring your mortgage payments, refinancing or both, there are several benefits to you when you use this strategy. Some of them are as follows:
Deferring your mortgage payments:
- More money in your pocket in the short-term to pay for immediate expenses.
- Less financial and mental stress.
- Financial relief when you are laid off or incurring additional expenses due to the COVID-19 crisis.
- Will not trigger a default on your mortgage.
- Will not harm your credit score.
Refinancing your mortgage:
- Gives you the opportunity to reduce the amount of interest you pay on your mortgage.
- Potential to lower your monthly payments, shorten the length of time it takes to pay off your mortgage, or both.
- Opportunity to use up to 80% of the value of your home equity to consolidate other higher interest debt.
- Opportunity to receive up to 80% of the value of your home equity in cash to use for emergency needs.
What it Means for Canadians
The fact that more and more Canadians are being given the opportunity to defer their mortgage payments during this difficult time is good news. It means that even though there may be rough economic days ahead, we will hopefully not see a lot of Canadians losing their homes.
Hopefully, for many Canadians who have been laid off or lost their jobs during this time, they will be called back to work or find other employment and be able to start making their mortgage payments once again. The few months that they will be able to defer their mortgage payments may be just what they need to keep them financially stable until things return to normal.
Since less Canadians will lose their homes as a result of being able to defer their mortgage payments, it will have a positive effect on the real estate market (home prices are less likely to drop) and an overall positive effect on the economy.
Would you like to defer your mortgage payments or refinance your home? Call Matrix Mortgage Global today!
If you would like to defer your mortgage payments or refinance your home – or both – you owe it to yourself to contact Matrix Mortgage Global today. We offer great rates and you won’t have to jump through a lot of hoops or red tape.
These strategies can help to provide you with emergency financial relief during this difficult time. Our brokers specialize in providing solution based lending for all situations.
Do you need help?
Then contact us today! We can get your funds to you within two business days and your application can be approved in minutes.