September 3, 2020
At the end of 2019, Medium published the article, “20 Words for 2020.” Their top words? Unpredictability, transformation, and extreme. Looking back, they would probably add a few more words to this list. For us, we’d like to add the words mortgage deferral.
We’ve talked about mortgage deferrals with our clients this year. As we first went into isolation, a great deal of Canadians considered deferring their mortgage payments. It’s estimated that at the peak of the shutdown, approximately 20% of all Canadians with a mortgage had requested a deferral of some sort.
We have to give credit where credit’s due (no pun intended.) The major Canadian financial institutions, and our Federal Government, were quick to create a deferral strategy and guidelines. Clients who requested a deferral with a reasonable reason why were quickly granted up to six months of deferment. A huge relief for many.
Our team, along with the mortgage industry, did our best to coach clients through the chaos. One of the main coaching points was that these payments did not disappear, but rather, would be tacked onto the back end of the mortgage in some manner.
There was some confusion on how each lender was handling this math, but in the end, the entire deferral process for the most part was handled much better than could be expected given the circumstances. Hey, there’s at least one silver lining to this really dark cloud.
We’ve recently seen news stories this week from the Office of the Superintendent of Financial Institutions (OSFI) about the changes to the deferment process. If you didn’t see these stories, don’t worry. It’s only us mortgage nerds who tend to read these riveting reports from the OSFI.
The OSFI is the regulator for major financial institutions, like most of the lenders we deal with as mortgage brokers. OSFI announced the temporary rules of the capital requirements required for a deferral are beginning to be phased out. What does this mean to you as a mortgage holder?
These changes aren’t surprising as we expected something like this to be introduced. The good news is? If you’re still in a situation where you need to defer your mortgage, a deferral could still be a possibility with your lender.
There are other options for reducing your mortgage payment as well, making it a bit easier on the wallet. You can speak with your broker or directly with your lender to change from bi-weekly payments to monthly, potentially freeing up some cash flow. There may also be an opportunity to refinance and lock in a lower interest rate which again, could lower your monthly payment.
If you require any more information and tips on how to make such a request, our team of mortgage brokers are happy to provide their expertise.
Source: Quantus Mortgage
Please feel free to contact me with any questions you may have. It would be a pleasure to assist you or any one of your friends or family members!