OSFI recently announced they are winding down the COVID-19 related relief for deferred mortgage payments. It’s important to note that if you request to defer your mortgage moving forward it may negatively affect your credit.
Here are some questions we answered to help you better understand the process. While it’s not ideal, a mortgage deferral may help you navigate through these challenging times.
What is a mortgage payment “deferral”?
A mortgage payment deferral means that you will not be required to make regular payments on your mortgage (principal and interest) for an agreed-on, temporary amount of time. Once a mortgage deferral period ends, your mortgage payments go back to normal and the missed payments (including principal and accumulated interest) will need to be repaid. For an illustration on how deferrals work click here.
Property tax installments and insurance premiums are entirely separate from this program and must continue to be paid. If municipalities and insurance companies offer similar programs, they should be contacted separately.
How do I apply for a mortgage payment deferral?
Every lender will have their own application form required to process your deferral. Contact your mortgage broker or lender directly to begin the process.
How do I apply to extend my existing mortgage payment deferral?
If you would like to re-apply to have your existing payment deferral period extended you will have to re-apply for the deferral. This may also negatively effect your credit.
How do I cancel my existing mortgage payment deferral?
If your financial situation has improved (congratulations!), and you would like to cancel your deferred payments (i.e. resume making regular principal and interest payments) contact your lender directly and they will provide you with the cancellation form.
Are the deferred payments erased or cancelled?
The mortgage deferral agreement does not cancel, erase or eliminate the amount owed on your mortgage. At the end of the deferral period, the deferred payments will continue to accrue interest and will be added to the outstanding principal of your mortgage. This can affect the total amount you owe in accordance with your original payment schedule.
What can I expect at the end of my mortgage deferral?
At the end of your mortgage deferral period, the total amount owing on your mortgage will be higher due to the interest that has accrued. Your payment amount will be the same as it was before the deferral period unless it is required to be adjusted to ensure the mortgage maintains the remaining amortization period with the new higher outstanding balance. The amount of all your deferred payments will be added to your mortgage balance when your mortgage renews and paid off during the remaining amortization, or if you pay out your mortgage. You can also contact us after your deferral period and increase your payment amounts/frequency to pay it off during your term if you prefer.
Am I eligible for mortgage payment deferral?
You may be eligible for a mortgage payment deferral if you or another party on title of the mortgage have become unemployed or experience a material reduction in income due to COVID-19. The program is administered on a case-by-case basis to individuals whose mortgages are in good standing.
Should I defer my mortgage payments?
Individuals considering this option should give it careful thought and recognize that the program is designed to alleviate temporary hardship due to the impact of COVID-19 and is not mortgage forgiveness.
The interest, which would otherwise be part of your regular mortgage payments, is added to the outstanding balance of the mortgage. Depending on the current position of your finances, it may be better to continue with your mortgage payments if you are able to do so. However, if you really are in a predicament because of the COVID-19 crisis where the disruption of cash flow is preventing you from making a mortgage payment, a deferral might be your best route.
Can I renegotiate my mortgage terms to while in deferral?
No, the lenders want to see deferrals canceled prior to granting any mortgage approval to change or or increase the mortgage.
Are property taxes and other lender-coordinated payments included in the deferral?
Under the deferral program, only the mortgage payment (principle and interest) is deferred. Other payments regularly withdrawn with the mortgage payment by the lender, such as property taxes or life-disability insurance, are not included in the deferral and must continue to be paid. If municipalities and insurance companies offer similar deferral programs, they should be contacted separately.
If I have mortgage arrears/previous missed payments can I still qualify for payment deferral?
Clients with over 90 days arrears may not eligible for the deferral program.
My mortgage is for a rental property, can I qualify for payment deferral?
Rentals will often be handled on a case-by-case basis depending if it is an insured or uninsured mortgage and if true financial hardship can be demonstrated.
If you have tenants that are unable to make payments due to the pandemic we encourage looking into tenant relief programs introduced by some provincial governments. Rental property owners should strongly encourage their tenants who have been financially impacted due to COVID-19 to apply for these programs if available.
No matter what happens in your life journey, we have options to help you. Know we will always be here to help. If any changes arise for you or your loved ones please don’t hesitate to contact us at hello@countoncalla.ca.
Angela Calla is a 16-year award-winning woman of influence and mortgage expert. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. She educates and empowers individuals on the “The Mortgage Show”, which she’s hosted for over a decade and is the best selling author of The Mortgage Code available on Amazon. All proceeds from her book sales are donated to Access Youth Outreach services, a local charity in our community supporting our youth.
Angela leads by example with passion and conviction. She is known as an industry expert on TV and radio and the go-to source for publishers across the Country. On top of all her achievements, Angela finds the time to be a loving wife and mother of two beautiful children.
For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or 604-939-8777.
