The coronavirus pandemic, better known as COVID-19, has changed regular life on Earth with long-term implications.
Economy and business are bearing the brunt of lockdown and limited production.
People are losing monthly income, and job security is on thin ice.
Ease the difficulties
To ease the difficulties arising from the pandemic, the Canadian Government has several financial packages and schemes to mitigate the damages.
COVID-19 Mortgage Deferral Program is one such temporary allowance for a homeowner to delay the payment on of their mortgage.
The agreement is between the owner and the creditor.
It ensures a pause in the regular mortgage payments without any penalties or incurring additional costs.
The period of leniency should extend until the restoration of a steady income and ordinary life.
After the deferral period, homeowners must pay the principal amount at the usual interest rate.
No termination or reduction
It is important to note that the mortgage deferral does not indicate any termination or reduction of loan amounts or interest.
However, the interest amount will continue to accumulate over the temporal break.
Following calculations, it adds to the final price that might be more than initially agreed.
The deferral program solely concentrates on mortgage amounts. It does not extend to property taxes or insurance premiums.
Reimburse these payments at periodic intervals. You and your lender need to settle the details of repayment on recovering from the lockdown.
They can also assist you in evaluating whether you are eligible for the program or not.
Credit Score Not Affected
The six most significant lenders in the country, including RBC, Scotiabank and National Bank of Canada, have deferred over 10% of outstanding mortgages.
While the period of deference may differ, it is usually up to six months. Lenders will not enlist the delayed mortgage payments as late or missed.
Hence, the credit score of a consumer is not adversely affected.
Pay Attention
It is advisable to sign a legally binding contract with their lender to ensure they uphold the rights of the program.
While the program provides are a more relaxed duration for repayment, the borrowers will need to pay a higher amount by the end owing to the regular monthly interest rate.
The Canada Housing and Mortgage Company (CHMC) is responsible for overlooking the implementation of the program.
If your mortgage is not covered by CHMC, contact your creditor to explore alternate options and details regarding your insurance.