COVID-19 and Mortgage Rates
What does that mean to you?
With so much uncertainty, there is a lot of “lingo” being thrown around right now and it can be very confusing. I want to try to clear a few things up.
Job uncertainty, economical conditions, a global health crisis. These are all things that we as a community are facing, some to more of an extent than others right now, but the consensus is things are hard and things are scary. Regarding your mortgage however, there are few options available that might provide some piece of mind.
Payment deferrals. The Banks across Canada have stepped up and are willing to work with clients on a case-by-case basis. What people must keep in mind, is that in order to defer your mortgage you must have been impacted by the current situation ie. job loss or health implication to such an extent that you are unable to make your regular mortgage payments. Banks respond best to those who are acting proactively. If you think that because of the COVID-19 virus you will not be able to fulfill your current loan obligations the time to act is now. Banks are much more responsive before a payment has been missed versus after. A common misperception or misunderstanding is that by deferring your mortgage payments you’re missing the payments – that’s not true. By deferring your mortgage, you are adding these payments onto the end of the term of your existing mortgage. For example, if you have 10 years left in your mortgage and you decide to defer your mortgage then you will have 10 years and 6 months remaining. This doesn’t mean that it’s a bad idea, especially considering the circumstances but it is something to make note of. Also, if you are considering deferring your mortgage keep in mind that the Banks are currently experiencing extremely high call volumes now, so be prepared to wait to speak to someone.
Rate volatility. For the past few weeks, the mortgage industry has been sharing numerous rate decreases but that is changing. With the uncertainty of the global economy rates have started to creep up, so if you are considering refinancing or if you are in the process of moving, the time to lock in is now! By getting pre-approved you are guaranteed that rate for 120 days and if rates do happen to drop again, you are still eligible for the better rate. This just provides some piece of mind while you’re making these financial decisions.
The days ahead of us are unclear, but with these programs in place and by reaching out to professionals for help, there are some excellent options to help weather this storm.