Mortgage deferrals and ten more timely tips
I hope you and your family are enjoying good health and finding some measure of happiness in this strange spring. Certainly, many Canadians are feeling the financial pressures mount as we work together to conquer this pandemic. The good news is there are strategies that can help.
The Mortgage Deferral Program has been the first line of defense for thousands of homeowners looking for immediate financial relief.
A Mortgage Deferral is not payment “forgiveness” that allows you to simply miss payments. While you don’t pay anything at all during the relief period, your lender will add the interest accrued during the skipped period to your outstanding balance, which means your mortgage balance will increase. Your payments remain the same for the rest of your term but can increase at renewal to account for the higher balance. Some lenders may increase your payments after the deferral. I can help you determine if this is right for you and advise how to apply.
Some additional strategies and tips:
- Consider other options. Instead of using the Mortgage Deferral Program, perhaps you can borrow what you need from a Line of Credit, making interest-only payments until the financial stress begins to ease. Other possibilities include extending your amortization or moving from accelerated to monthly payments.
- Applying for the CERB. You need to apply to the Canada Economic Relief Benefit (CERB) for each 4-week period that your situation continues, up to a maximum of 16 weeks. If you are receiving the CERB through EI, you simply complete your bi-monthly reports to continue receiving your benefit. Keep in mind that these payments will be taxable to you next spring.
- Get your tax return filed. If you collect the Child Benefit or GST/HST credit, you don’t want your benefits delayed. If you’ll owe money, payment has been deferred until September 1, so don’t let that keep you from filing now.
- Check your travel points program. Many points programs allow you to redeem travel points for gift cards that will help pay for gas, groceries and other essentials.
- Ask your credit card provider about minimum payment deferrals. Some providers will allow deferrals to help get you through a tough patch.
- Talk to your local utilities and communications providers. Again, many are willing to talk about payment options or deferral programs.
- Look for money leaks. Go through your credit card and bank statements with a fine-tooth comb, looking at subscriptions or other expenses that can be eliminated or reduced.
- Make a (better) budget. Check out the good budgeting apps that are free – Mint, Wally, or check out KOHO, which is like a chequing account with the perks of a credit card.
- Be aware. These are unsettling times and unfortunately there has been a wave of fraudulent scams. Visit the Canadian Anti Fraud Centre for up-to-date information.
- Adopt a positive mind. Use this time period to be better with money. There are many predictions that our new habits will carry forward with us, so adapting and keeping better money habits will serve us well in the bright future that is just over the horizon.