Due to the covid-19 outbreak, some people are facing unemployment and some reduction in employment hours. As a result, bills are piling up, making it hard to maintain a balance of income and expenses. Borrowers are missing their mortgage payments because they do not have sufficient income, which is deteriorating their credit history. The reason behind that, they are not aware of Mortgage Deferral Payment and how it works. In this blog, we would discuss how you can avoid mortgage arrears and get a good hold on your mortgage payments. Besides, we would answer some frequently asked questions on deferred payment.
What is Mortgage Deferral Payment?
Mortgage Deferral Payment is an agreement between borrowers and lenders that permits borrowers to delay their mortgage payments for a specific time; generally, it is for 6 months. They continue making mortgage payments once the deferral period is ended. Also, they would now pay back the mortgage payments postponed. How they repay the deferred payments is decided by their financial institution.
Lenders can ask borrowers to extend their amortization period, blend deferred payments to mortgage balance once your mortgage term is ended, or raise monthly mortgage payments.
Furthermore, your financial institution will continue to charge interest on the amount you owe during the deferral time, which will surge the outstanding mortgage balance up. Consequently, interest charges would be higher if your mortgage principal is higher, and you will spend more thousands of dollars on repaying it.
What are the eligibilities for applying for Mortgage Deferral Payment?
• You or your family member are unemployed due to pandemic.
• Reductions in employment hours.
• You have a mortgage that is insured or not.
• If you were making mortgage payments on time before covid-19.
• Whether your house is your Principal Residence or you also having a Rental Property.
Here are some frequently asked questions on Mortgage deferral payment:
1. What happens when you defer your mortgage payment?
If you postpone your payments, it depends on how your lender wants you to pay off. He may ask you to increase monthly mortgage payments to repay the mortgage within the original amortization period. He can also consider your financial situation and increase the amortization period, so you do not get any raise in regular mortgage payments. As a result, you would pay more interest due to the increased amortization period.
2. Will deferring my mortgage affect my credit score?
Deferring a mortgage will not affect your credit score. Still, your mortgage on Credit Bureau will show as delayed, making other lenders not extend you any new credit until that deferral is removed from credit when you start paying back.
3. Can I get my mortgage payments deferred?
You can ask your lender or financial institution if he allows you to postpone mortgage payments for a particular time. He can consider some factors like mortgage in good standing, no arrears, or past due payments. If you are making payments on time since you got approved for mortgage, it is a positive sign, the lender can help you in that unforeseen situation.
4. Can I cancel my mortgage deferral early?
It depends on your lender; the situation gets varied from lender to lender. He can agree that you can cancel the mortgage deferral early as you are not confronting financial hardship anymore, which can help you save money on interest. Some lenders may allow you to pay the deferred amount without paying the penalty. However, if your lender does not allow it, you would spend more money to pay an extra interest charge on the mortgage. The best option is, ask your lender these questions and get all the answers.
5. Can I skip Property taxes payment?
You can have a word with your lender or financial institution if they agree to pay on your behalf or not. Some lenders do not provide you with this option, and you must continue to pay property taxes. However, you can contact municipalities if they offer property tax deferral programs if you cannot make payments.
Why choose us-
As a leading Mortgage Brokerage, we have strong relations with multiple banks and numerous lenders. We work with Canada’s leading lenders to provide you a mortgage solution that fits your budget. Our mortgage and financing process is amazingly simple, we represent you and match you with the best suited mortgage as per your needs. This way we can guide you through this complicated process with our years of mortgage financing experience.
• We are dedicated and professional Accredited Mortgage Brokers in GTA.
• We are well trained and have experience in the mortgage financing field more than 10 years.
• We can shop around with different lenders to get you the best possible mortgage rates and conditions as well.
• We have different options for different income and credit level with access to number of private lenders to suit borrower’s needs.
We are a professional mortgage broker in GTA. We can help you secure a mortgage with best mortgage interest rates. We are located at 2 County Court Blvd., Suite # 438, Brampton, ON L6W 3W8. Call MB Mortgages Inc. today at 905-458-6929/416-939-7131 for your queries or you can email us at: [email protected] or you can visit our website at www.mbmortgages.ca
The information provided in this blog post is intended to provide general information. You should consult with a mortgage professional to fully determine the scope of your situation. MB Mortgages shall not be held liable from usage of the information provided on this page. Individual situation may vary.