In March of this year, many Canadians took advantage of an option called mortgage deferral. When your mortgage is deferred, your principal payments are postponed thus lowering your monthly expenses to cover interest charges only.
What you need to know
Now, almost 6 months later the same Canadians are facing the end of their deferment period. With employment still sluggish across Canada, some of these borrowers may not be able to manage making full monthly mortgage payments again.
If your mortgage deferral ends and you are unable to manage the upcoming monthly payments, you could be facing harsh financial penalties. Depending on how many payments you miss or don’t pay in full, you could potentially lose your home.
What can be done to deal with the end of mortgage deferral?
The good news is that there are options available that can help you keep your home, and successfully manage payments. These options are readily available at the Mortgage Broker Store.
How Mortgage Broker Store is helping clients
With their network of private lenders in Ontario, the Mortgage Broker Store can connect you with local lenders who can provide loans to help you manage your debt and reduce overall expenses regardless of your income or credit score.
Private lenders approve loans based on equity, or how much of a property a borrower has paid off. As long as you own and have paid off at least 20 percent of the property you are using to secure the loan, private lenders will allow you to borrow up to 80 percent of that equity for a mortgage or other loan.
Most loans from private lenders only require the monthly interest to be paid, not the principal, which could potentially free up hundreds of dollars each month.
Also, private lenders can approve a mortgage or loan in a matter of weeks.
Mortgage Refinancing
Mortgage refinancing is when you get a new mortgage to replace the old one. This can be beneficial by allowing you to get a lump sum of cash that is equivalent or close to the value of your property. This amount of money can be used to replace the old mortgage while also paying off or consolidating your debts, investments, or managing medical and other bills..
You can use mortgage refinancing to lower your monthly mortgage payments. Your new refinanced mortgage lender will charge you interest based on current rates. If the current interest rate is less then when the old mortgage was created, your refinanced mortgage payments will cost less each month. Even a 1 percent drop in interest rate can save you hundreds each month.
Second Mortgages
A second mortgage is a good way to use your home equity without having to refinance, your entire property all over again.
A second mortgage can provide you with enough funds to pay off some of your existing debt that you may have accumulated during the pandemic. This may take pressure off your existing income to enable you to make full payments on your first mortgage when the deferral period ends while also managing other debt.
A second mortgage requires monthly payments. However the amount is usually much less than a first mortgage monthly payment.
It is worth noting that the interest rate charged on a second mortgage will be higher than the rate for a first mortgage due the added risk.
Understanding Your Mortgage Deferral Options
If you need help to manage through the end of a mortgage deferral period, the Mortgage Store can help. Whether you need mortgage refinancing, a second mortgage, or another type of loan, the Mortgage Store can find the right solution for you.
If you haven’t yet used mortgage deferral, you could still be eligible to receive it if you apply to your current lender before September 30th and if you can prove that you have experienced a loss of income or unemployment due to COVID-19.
Managing Your Mortgage During COVID-19
Almost 1 million Canadians have used mortgage deferral, representing up to 1 billion dollars in deferred payments each month since March. With so much debt pilling up from deferred payments, many borrowers may find themselves unable to manage the upcoming expense without help. At the Mortgage Broker Store you can use available tools like the Mortgage Payment Calculator and the Private Mortgage Rate Estimator, to gauge your future payments, the current value in your home, and if you can get approved for a loan, all on your own.
You can also directly speak with local brokers and private lenders to better understand mortgage deferrals and what they mean for you.
As fear of a second wave increases, good financial planning and preparation is vital to weathering a COVID-19 resurgence. Deciding what financial option is best is anything but simple.
Remember, mortgage deferrals delay payments, not forgive them. Your lender will be expecting to recuperate those payments eventually.
Will you be ready?
