Hopefully, you are doing well during these uncertain times. We hope you have been receiving our ongoing communications we sent last week with the lender’s numbers and up-to-the-moment updates as they become available through our Facebook page. While response times are delayed, I wanted to take a moment to answer some common questions to help you with clarity as much as we possible can.
What is a mortgage deferral?
A mortgage deferral, if approved, allows you to delay the payments for the time granted, and done on a case by case basis. These vary greatly and is based solely on the decision from the lender. We have seen approvals between one and six months, with extended delay times for approval.
What happens during the deferral period?
Although you won’t be obligated to make the principal and interest payment, you will be required to continue to pay for your mortgage insurance (if you have it – critical illness/death) and property tax portions should the lender be collecting on your behalf.
How does it work?
Once the deferment is over your payment will increase to be higher and ON TOP of your regular payments. The amount will be added to each payment remaining on the term. The longer the deferral the higher your payments will be after the deferral period.
As of this moment, only those who DO NOT have the ability to work or make payments as a result of COVID-19. Anyone who is still employed at this time will not qualify.
What about rental property mortgages?
Deferrals in general are not being approved on rentals at this time. If /when they are, it will come with additional costs for the landlord as noted above once determined. Landlord BC is working on a rent bank and details are expected later this week.
What about my secured line of credit?
Experience has demonstrated lenders are increasing their spreads based rates on variable rate mortgages for secured lines of credit. If you have one that is drawn, we will want to look at locking that into either a fixed rate or variable rate mortgage. If you are still employed, it might be worth refinancing at today’s low rates into one whole new mortgage.
My employment is secure, and I am working throughout this pandemic, what can I do to be proactive and protect myself?
If you don’t presently have six months of living expenses set aside and you are still employed, this would be the time to take out some equity for emergency funds.
My parents/grandparents (over 55) lost money in the stock market and I’m worried about them having the cashflow they need.
A reverse mortgage will allow them to access their equity in a lump sum, or monthly payment or combination of the two. As a reverse mortgage is not viewed as income. They will still receive any entitled pensions and not have to take further losses in the stock market if that’s how they were drawing their living expenses. They will not have to traditionally income qualify, they will make no monthly payments and have access to there equity, this is a way better alternative then utilizing high interest rate credit cards to get by.
Please reach out to us with any questions to firstname.lastname@example.org and while our responses will be delayed and we may not have all the answers, we will always do anything we can to help at our earliest opportunity.
Stay healthy and safe
Angela Calla Mortgage Team