• Deferred Mortgage Payments: Family, Finances and Your Credit Score During this Crisis

    March 24, 2020
  • Deferred Mortgage Payments: Family, Finances and Your Credit Score During this Crisis

    Being in the Canadian mortgage industry for the last 30 years really does not prepare you for moments like this during the Pandemic. I wasn’t ready in the early 90’s as well during our last steep recession. I guess you’re never really prepared for the deep human toll these incidents bring. This past week we spoke to many of our clients who are laid off, scared and generally in an unfamiliar territory. The concept of deferred mortgage payments has been introduced.

    Let’s begin with the choices local families have to make. The choice is the family, their finances and their credit score effect. The Canadian government is allowing you to defer your mortgage payments for up to six months. What does this mean?

    It means you do not have to make your full mortgage payment of principal and interest for six months. You can get some relief from deferred mortgage payments.

    1. Are they completely waiving them?

    No. The mortgage payments are simply delayed.

    2. Will it affect my amortization?

    Yes. It will delay them by six months.

    Here is an example:

    Mortgage Balance = $300,000
    Amortization = 24 years
    Monthly Payment = $1,500 ($750 interest and $750 principal)

    By deferring the payment, your family will not be paying $9000, and this is vital to PRESERVE CASH. The cash should be for food, other groceries and emergencies.

    Here is how your mortgage will look after six months:

    Mortgage Balance = $304,500
    (all interest adds to the balance) = $750 x 6
    Amortization: 24 years, 6 months

    Kindly note that your mortgage payment will go up as well after six months.

    The good news is that you preserved valuable cash.  It is my understanding that there will be a delay in the mortgage payments. Your credit score will not be negatively affected by the lenders and credit agencies.

    In terms of credit cards, make the minimum payments for the next six months. This will preserve your credit rating and again, save valuable cash.

    By taking these steps, you will have protected your family, saved money for your important priorities and saved your credit score for future borrowing.

    If you should have any questions, please do not hesitate to contact me.

    Stay safe.

    Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

    If you would like to apply for a mortgage online, please follow this link.

    If you would like to see our Google reviews or leave one yourself, you can do so here.

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