Bob Reader of Canadian Mortgage Professionals joins me today as my special guest. Believe it or not, he just completed his 10,000th mortgage, so he’s definitely a mortgage expert. I brought him on because last time, we talked about how crazy sales in our area are—but it’s not all rainbows for everybody. Some people are having a really hard time, so today we’ll discuss some options you have for deferring your mortgage and what the ramifications of doing so might be.
Q: What options do those going through a hard time have?
The banks have been offering a deferred payment program for individuals who are struggling due to being laid off or because their expenses are piling up and they just don’t have the money to make regular mortgage payments. If this is your situation, contact your lender immediately. Each case is handled individually, and each lender has their own program. They’ll take into consideration where each person is in terms of their income and establish a time frame for repayment, which could be anywhere from one to six months.
Q: Is it true that the worst thing you can do would be to ignore the banks and do nothing?
Maintaining your credit is super important, not just for the short term, but also for the long term. Your bank needs to be informed as soon as possible if you have trouble making your payments or anticipate that you will. The repayment of the loan varies by the bank, so be sure to discuss how to repay the loan with your lender.
Q: Many people who took advantage of loan deferrals didn’t realize that it affects their credit. What’s going to happen with their mortgages down the road? Will mortgage payments skyrocket in the fall?
Some lenders will add the accumulated interest and payment to your mortgage balance upon renewal—whether that be two, three, or four years from now—and then refinance it. Some lenders will add the payment to your balance as soon as the deferral program is over and increase the payment to be reflected over the remaining amortization period of the mortgage. As to whether you can expect your mortgage payments to increase in the fall, that depends on your lender. Lenders have the option to renew the mortgage or not, and if someone is in the deferral program and gets laid off, the lender may extend the mortgage or offer renewal. Be sure to shop around when looking for renewal options and renegotiate what you get in that renewal.
These are some great points for people who have already started the process and have concerns, as well as those who aren’t currently in trouble and want to make sure they get the best deal. Right now, we have high-ratio mortgages under 2%—it’s almost like free money.
If you’re looking at selling your home as your last option, reach out to us to learn more about our guaranteed sales program or if you have any other questions. We’re here to help you solve your problems and realize your dream.