Your Mortgage Guide

The Coronavirus Shutdown: How To Get Mortgage Relief in Canada 2020

The fight against coronavirus has disrupted life in Canada. Restrictions in place hinder public life and economic activities in unprecedented ways.  Finding it hard to keep themselves financially afloat and repay their debt, a number of people across the country are looking for possible ways for mortgage relief in Canada in 2020.

As public authorities take steps to halt the COVID-19 pandemic, bars, restaurants, gyms, spas, daycares, schools, and shops remain closed. Small businesses across Canada have witnessed a 50% drop in sales. Personal services, hospitality, arts and recreation, and retail sectors that offer employment to over a third of Canadians are smarting under the lockdown. 

Factories remain closed and businesses are affected as people stay indoors. The closing of borders has brought trading to a standstill and investment plans may not take off for months to come. Layoffs are common with the cessation of business activities and falling revenue. Scaled-back operations and reduced office hours have resulted in a substantial loss of income. Canadians in every part of the country are now struggling financially. 

With Coronavirus disruptions set to last into the summer and economic uncertainty weighing heavily, the possibility of defaulting on mortgage payments is a serious concern for many Canadians. Here is Your Mortgage Guide’s compilation of the best options for mortgage relief in Canada in 2020 to avoid possible foreclosures. 

Talk To Your Bank, Get Relief Up To Six Months

Six largest Canadian banks have offered mortgage repayment deferrals for up to six months. These include Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank.

A statement announced on March 18 on behalf of these lenders expressed their “commitment to work with personal and small business banking customers on a case-by-case basis to provide flexible solutions to help them manage through challenges such as pay disruption due to COVID-19, childcare disruption due to school closures, or those facing illness from COVID-19.

The unprecedented measure by lenders offers a significant relief to worried struggling homeowners impacted by the coronavirus disruption. They can hold on their mortgage repayments up to six months without any fear of foreclosure. It also offers relief on other credit products.

Individuals and business owners are required to directly talk to their banks and know the options they are entitled to avail.

 Those facing (or expected to face) serious consequences due to the unanticipated disruption in life and job can discuss debt relief options with their respective banks. Let’s know if you need any help. 

Savvy brokers like Your Mortgage Guide can help you negotiate the best possible deal with your bank, allowing the maximum possible mortgage relief in Canada in 2020.

Housing Agency Enabling Relief Offers

This came in the backdrop of the Canada Mortgage and Housing Corporation (CMHC) efforts to prevent the health-care emergency from pushing stressed mortgage borrowers into defaults. As an immediate step, lenders can offer deferred mortgage payments to borrowers for loans that are insured by the Crown Corporation. 

The national housing agency has “already extended mortgage forbearance for insured mortgages together with Genworth Canada and Canada Guaranty” and is “exploring, with others, potential relief measures for those who cannot make payments on uninsured mortgages and renters.”

Any housing lender receiving funds from the agency is barred from carrying out any evictions. It has stopped quality assurance reviews to facilitate more action by lenders to help their customers until the restoration of the state of normalcy. 

The coming weeks are sure to witness more measures to give besieged house owners more mortgage relief in Canada in 2020. Stay connected with us to know about them.

The State Support Package

Prime Minister Justin Trudeau has come out with a $27 billion package for citizens and another $55 billion in support to businesses in the country. 

The assistance provides direct and indirect relief to worried mortgage borrowers facing financial difficulties because of the COVID-19 crisis. 

In a direct measure to offer relief for mortgage borrowers, CMHC is to purchase up to $50 billion of insured mortgage pools with the backing of Bank of Canada. A “market liquidity tool,” this step helped shore up lenders during the global slowdown. This will provide increased flexibility to lenders to offer deferred payment options to homeowners struggling due to COVID-19 disruptions without causing liquidity crisis. 

As loan repayments are not forthcoming, CMHC will provide funding to mortgage lenders to allow them to provide loans for Canadians. If the crisis prolongs, the housing agency can guarantee insurance mortgages up to $150 billion, significantly improving the scope for mortgage relief in Canada in 2020.

Increased child benefit payments and $900 bi-weekly support to those without employment insurance are sure to boost the financial affordability of house owners. There is also the provision for emergency support to unemployed workers, deferred income tax payment, and 10% wage subsidy to small businesses for 3 months limited to $1,375 per employee. All these steps will help borrowers indirectly save on their bills and pay without missing mortgage payments for a few weeks. 

Plan your finances well while working on securing deferred mortgage repayments. 

Call us if you need any expert help. 

Consider A New Line of Credit

To prevent foreclosures, many are contemplating to fall back on their registered retirement savings plans. 

Others look to cash advances on credit cards to continue with repayments.  Based on our experience, we suggest you to explore the less costly option of getting a line of credit. Interest rates though are higher compared to mortgage rates yet lower compared to credit cards. The biggest advantage of such loans is flexible repayment terms, which you need the most at present.

Debt Consolidation is a reality right now and a great time to take advantage of these extremely low interest rates. A new line credit as a potential mortgage relief in Canada in 2020 makes much sense. Interest rates were on a downward spiraling in the last week. On March 15, the Fed reduced benchmark  rates to 0%-0.25% range. The pressure is building on the Bank of Canada to act. 

The opportunity to refinance and take advantage of these low rates only lasted a couple days and only a very small percentage were lucky enough to do so.  

Since then rates have continued to rise and on Monday they will be increasing again.  If you are worried about making your payment or paying too much, it’s best to start speaking with your current lender about deferring your mortgage payments.  

Negotiate With A Lender

If none of the above options work for you, open negotiations with your lender. The primary concern of a lender is the money, not forcing a foreclosure. 

With the government permitting them to allow deferred mortgage repayments, lenders are sure to provide you with a favorable response. 

Talk to your lender and make most of their willingness to work with borrowers to arrive at a solution. If you have an insured mortgage, you have options that include reduced payments, extending the loan term, installment deferments and missing payments that can be added later. Mortgage default insurers, including CMHC, Genworth Canada and Canada Guaranty, run programs to help both lenders and borrowers to negotiate a common ground. 

In the current scenario and with the government pushing for deferred payments and non-foreclosure, these insurers are working to support struggling homeowners find effective mortgage relief in Canada in 2020. For example, the deferral period under Canada Guaranty Homeownership Solutions Program now stands at 6 months, instead of 4 months, which was the previous norm. 

Those with uninsured mortgages have a chance to avail skip-a-payment options without affecting their credit rating. 

Get in touch with our experts to know more about applicable mortgage relief in Canada

In short, panic is not an option. Do not let knee jerk reactions to the volatile market push you into taking decisions that are not sustainable or economically unwise. You need time to recoup from the impact of the Coronavirus global shutdown. 

The government and other agencies realise that. 

There are options to stay afloat for all types of property owners and mortgages. We have only outlined a few of the more popular recourses. 

The key here is communication. Talk to your broker and your lender. Make sure that you emerge from this crisis with a game plan that also makes sense as the economy recovers. Foreclosures are always a risk, but they are NOT on the minds of your lenders right now. 

So expect cooperation, and work with sound advice. 

If you do not have a well-wisher by your side who understands the markets, you can book a free slot to talk to Your Mortgage Guide CEO Vaneesh Dass. We are here to support your well-being in these difficult times. 

Know Your Mortgage Relief Options.

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