The COVID-19 pandemic has affected the employment and income of many hardworking Albertans. As a means of helping homeowners pay their bills during these times of economic uncertainty, several of Canada’s largest banks are offering payment relief by means of deferred mortgage payments.
Here’s what you need to know:
What is the Mortgage Payment Deferral?
An agreement between you and your lender, a mortgage payment deferral allows you to pause or suspend your payments for an allotted period of time. Sometimes referred to as a mortgage forbearance agreement, the deferral is a temporary measure that, upon ending, will see your payment schedule return to normal and the missed payments repaid.
Note: A mortgage payment deferral includes payments associated with your mortgage, only. It does not apply to other home-related costs such as life insurance, property taxes, etc.
Do the Deferred Payments Have to Be Repaid?
Payments are not eliminated or cancelled under the mortgage deferral agreement, and any skipped payments (including principal and interest) will need to be submitted. Once the agreement has ended, your regular payment schedule will continue with any deferred interest added to your outstanding mortgage principal.
Who is Eligible for a Mortgage Payment Deferral?
Eligibility will be determined by your lender. The Government of Canada recommends talking to your bank or mortgage professional to find out if you qualify for a mortgage payment deferral.
How Are Deferred Mortgage Amounts Repaid?
Repayment details will vary according to your lender and the stipulations outlined in your mortgage deferral agreement.
In most cases, however, the deferred interest will be added to the outstanding principal of your mortgage. As your regular payment schedule resumes, your mortgage payment may now be based on the new principal amount owing.
Are Mortgage Payment Deferrals Canada Mortgage and Housing Corporation (CMHC) Exclusive?
The CMHC is allowing lenders to offer deferred payments for insured mortgages. However, all mortgage insurers will provide tools to lenders as a means of assistance for homeowners struggling with their current mortgage obligations. Be sure to contact your bank or mortgage professional to see what options may be available to you.
I’m Worried About Making My Next Mortgage Payment. What Should I Do?
If you’re experiencing unforeseen financial difficulties, it’s important to take action as quickly as possible. Be sure to follow these three simple steps:
1. Talk to Your Lender
Notify your bank, lender or mortgage professional of the current situation ask them what tools/options they have to assist you. Be sure to update them regularly as circumstances evolve.
2. Disclose Your Financial Obligations
Before meeting with your lender, be sure to prepare a detailed list of your current financial obligations. This should include your income, savings, investments and assets as well as credit card, loan, household bill balances and their due dates.
3. Take Advantage of Online Resources
The Government of Canada offers a wealth of online resources to help Canadians manage their finances. These include tools to assist you with debt problems, budgeting, collections, credit repair and more. Here too, you’ll find additional information on COVID-19 and managing your financial health in challenging times.
To our valued clients, please note that the Terry Paranych Real Estate Group is still open for business. While we will be adhering to social distancing recommendations in order to ensure your health and safety, we would be happy to meet virtually or on the phone to answer any questions you may have regarding buying or selling your home.
Stay safe, happy and healthy, Edmonton!
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