COVID-19 struck at the beginning of 2020, devastating millions of Canadians and reducing their income significantly. Renters struggled to pay their rent, while homeowners were worried about meeting their mortgage payments. The Canadian government made efforts to provide widespread financial support to the citizens.
Mortgage lenders stepped up with mortgage deferment programs to support homeowners experiencing financial hardship amid the pandemic. The Canadian Bankers Association (CBA) stated that, as of July 2020, a whopping 775,000 Canadians took advantage of this program. But, the mortgage deferment program, a six-month action plan proposed to Canadians in response to the pandemic, ended on September 30, 2020.
When the agreement to postpone your mortgage payments comes to a complete stop, you are required to restart payments. Unfortunately, your mortgage payment would be higher than before you deferred when you resume payment. But, thankfully, you do not have to suddenly come up with a large sum or lump sum to catch up on all deferred payments. However, what is the consequences when you cannot restart it?
There are two basic scenarios:
- If you can make the repayments within three to six months
- If you cannot see a way out from the mortgage deferments
If you can make the repayments within three to six months
- Reach out to your lender, either a bank or a mortgage broker, at the earliest and explain your current financial situation to him. Adding a co-signer with equity by including the assets used as a lien against the mortgage is a good option.
- Ask for an extension. Check whether your bank will provide you with a more extended deferral period. Even though the lender would not be happy, he would allow you to make smaller payments for a more extended period by reducing the amount paid in a month.
- Seek additional financing as borrowing is another option as it’s only for a short period. You could either use an existing line of credit or borrow money from family to make your payments for a few months. Once you are financially stable again, you can give back the money.
Do you want financial advice on any of the above options? Reach out to Dana MacRae at 1-800-665-9965.
If you cannot see a way out from the mortgage deferments:-
- Go for the refinancing procedure. Consulting a financial expert can sometimes be the best solution to analyze the economic struggles and create a solution. Your debt obligations might sometimes be the problem, not the mortgage deferments.
- File a consumer proposal. When you are struggling with your debt and want to keep your house, a consumer proposal can help. Borrowers can keep their homes and reduce their non-mortgage debts through consumer proposals, as long as they can pay their mortgage payments. A Licensed Insolvency Trustee administers a consumer proposal.
- You are selling your property. This is the final step to be taken when you start missing payments. It is always better to sell your home yourself than have the bank do it.
Are you interested in getting expert financial guidance or filing a consumer proposal? Call Dana MacRae | Licensed Insolvency Trustee on 1-800-665-9965.
Therefore, the end of mortgage deferments has been a financial wake-up call for many Canadians. If your mortgage deferments are almost up and you cannot repay them, it is a fact that there are many options to solve them. Contact Dana MacRae | Licensed Insolvency Trustee on 1-800-665-9965 for a free and confidential consultation.