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The Seeker Newsmagazine Cornwall

What Does the Corona Virus (COVID-19) Pandemic Mean for Your Mortgage?

Jenni MacDonald by Jenni MacDonald
March 16, 2020
in Business & Finance
Reading Time: 3 mins read
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We are in the middle of a world wide roller coaster ride with unprecedented restrictions being implemented to deal with the Corona Virus (COVID-19) Pandemic.  But what do these extraordinary measures mean for you and your mortgage?

BANK OF CANADA RATE

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With adversity comes opportunity – and our current mortgage situation is no different.  In order to keep our economy afloat, the government reduced the Bank of Canada rate on March 4, 2020 to 1.25%.  As a result of that decrease, most lenders also reduced their 5 year fixed mortgage rate.  Due to that rate drop, many buyers and refinancing clients were able to secure a great mortgage rate.  On March 13, 2020, the government dropped the Bank of Canada rate another 50 bps to .75%!  To my surprise, many lenders started to increase their rates immediately after this announcement!  If you are currently looking to purchase a property or refinance your current mortgage, this is an excellent time to see your Mortgage Broker about locking in a low rate.  

MISSING A MORTGAGE PAYMENT

So what happens to your mortgage payment if you are not earning any income?  The government has waived the waiting period for Employment Insurance benefits for those who are quarantined (https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html).  But what if your work place is shut down or you have to stay home to be with your children or you are in the service industry and you rely on tips to meet your monthly financial obligations?  If there is a chance that you cannot pay your mortgage payment due to an income reduction as a result of the COVID Pandemic, my first advice is to contact your lender immediately.  Many lenders have implemented emergency measures to help clients through this uncertain financial scene.  Putting a plan in place with your lender as soon as possible will help you avoid relying on credit that may ultimately hurt your credit score.  In most cases, your lender will allow you to miss some mortgage payments…. Please keep in mind that the interest you “miss” will still be added to the amount you owe on your mortgage. 

INSURED MORTGAGES

If you originally purchased your property with less than a 20% down payment (and have not refinanced your mortgage since), your mortgage is most likely insured by CMHC, Genworth or Canada Guaranty.  Contacting your lender the moment that you feel you will not be able to make your mortgage payment is vital.  CMHC and other mortgage insurers offer tools to lenders that can assist homeowners who may be experiencing financial difficulty. Their default management tools default management tools include: payment deferral, loan re-amortization, capitalization of outstanding interest arrears and other eligible expenses and special payment arrangements.  (https://www.cmhc-schl.gc.ca/en/media-newsroom/Notices/2020/cmhc-statement-covid-19). 
(https://www.scotiabank.com/corporate/en/home/media-centre/media-centre/news-release.html?id=3510&language=en)

There is no need to panic.  The government, the lenders, and the insurers are all aware of this time of uncertainty.  If you are not sure about your circumstance, please reach out for advice.

Additional information
https://dominionlending.ca/covid-19/

Author

  • Jenni MacDonald

    Jenni MacDonald (www.jmacdonald.ca) has been an award-winning Mortgage Broker with Dominion Lending Centres for over 12 years and has many years of experience in the banking world. She works with over 40 lenders, credit unions, and private lenders to find the best mortgage for each client. You can contact her by phone or text at 613-551-0639 or via email at jmacdonald@dominionlending.ca

    View all posts

Tags: coronavirusCOVID-19
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The Seeker Newspaper is located at 327 Second Street E., Cornwall, ON K6H 1Y8 -- All rights reserved
The Seeker does not accept responsibility for errors, misprints or inaccuracies published within. The opinions and statements of our columnists are not to be presumed as the statements and opinions of The Seeker, and should not substitute professional or medical advice.
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