How does the COVID-19 epidemic affect your mortgage

With the COVID-19 pandemic reaching its second week of interrupting our regular daily lives, there have been increasing questions in the wake of business closures and layoffs about how mortgage companies will face the significant disruption to the lives home owners.

The great news is that mortgage lenders are made up mostly of people just like you and me. It is widely understood that the pandemic will affect most people, and that they know there will be people who have a difficult time making mortgage payments. If you are currently not working due to the pandemic and that is affecting your ability to pay the bills, give your mortgage lender a call and let them know. They will most likely have a procedure in place to help you.

If your mortgage is insured with high ratio mortgage insurance such as CMHC, Genworth or Canada Guaranty, there are programs in place for events such as this that will allow you to defer your mortgage payments and will just allow them to be added on to the balance owing for up to 6 months.

Even if your mortgage is a conventional mortgage (not insured), mortgage lenders will try and work with you. I have seen in many cases even private mortgage lenders work with a client to get through difficult times. Again, they are people like you and me, and almost no mortgage lender, whether it be a private mortgage lender or a major institution wants to foreclose on a mortgage.

If you have significant equity in your home, there are some mortgage products that are excellent to have in times such as this. Such programs are home equity lines of credit (HELOC’s), which is a line of credit secured against your home at much better rates than unsecured lines of credit, and allow you to draw funds as needed for any reason, whether it be investment in this depressed stock market (which could be viewed as an excellent buying opportunity), to supplement your income, or to make regular mortgage payments. One of my favourite programs that I have for this is the Manulife One mortgage. One of the great benefits of this mortgage is that the HELOC component of the mortgage requires no minimum payment, the interest just gets added to the balance daily. Some seniors will treat this mortgage as a type of reverse mortgage but with lower interest payments and more flexibility.

If you have any questions regarding your mortgage and how it is affected by the pandemic, please feel free to reach out to me. If you would like to have a consultation about which mortgage might be best for you in times of need, please reach out to me, by phone, text, or email. I hope everyone is doing well in these difficult times.