When the six big Canadian banks announced last week that they were offering mortgage holders a six-month deferred payment option, some people were skeptical or confused. And who could blame them? Good news has been hard to come by lately and with a deluge of information from the media and press, it’s hard to know up from down.
The purpose of this post is to clear up that skepticism and confusion and provide clarity and information to Canadian homeowners.
The majority of questions I’ve received from mortgage holders regarding the new six-month deferred payment option were primarily about the following concerns:
a) How it might affect their credit rating
b) How expensive it would be in the long run to defer mortgage payments
c) What the process is to apply for the mortgage deferral program.
Well, here is some good news.
The six-month deferred payment option does not affect your credit rating, it is not expensive, and it is easy to apply for, but you have to reach out to your bank in order to apply for it. It is not automatic.
Let’s go through each concern, one at a time in more detail.
No. Not at all. When Equifax was asked about the matter, they said in a recently released press release that “In the event that a lender makes a credit relief or payment deferral program available to its consumers to opt out of making monthly payments during a pandemic, Equifax’s expectation is that the lender would take actions on its system to ensure that it does not report any derogatory or missed payment information to the credit bureaus that is misaligned with the program it has implemented.”
In other words: do not worry about your credit score if you apply for the deferred mortgage payment option. It should not be affected.
Nothing in this world is free, but that does not mean that this deferred payment option is expensive.
Yes, you will have to pay back the monthly interest that your mortgage accrues, but it will not be an excessive amount of money. To put it into context, if your monthly mortgage payment is $2000 and your mortgage interest rate is 3.00%, you will pay around $5/month more for deferring your mortgage payments. In essence, you can defer your mortgage for the price of one Grande sized Starbucks coffee per month.
First off, it is not automatic. You must call your lender and apply for the six-month deferred payment option. I will include the contact numbers of most major lenders in Canada below.
When you get a hold of your bank, it is easy to apply for this program. Just remember, they are probably swamped with calls right now, so it might take some time to get in touch with someone. Patience is a virtue, and it is a virtue that can save you some money and stress in the short term.
If you have any questions or concerns, feel free to reach out to a mortgage broker at Clover Mortgage at 416-674-6222 or by email at firstname.lastname@example.org and we will be glad to help you navigate and understand the process better.
Bank of Montreal 1-877-895-3278
BluePrint Mortgage 1-877-637-7881
CFF Bank 1-855-767-3031
Chinook Financial 403-934-3358
CMLS Financial 1-888-995-2657
Connect First 1-403-520-8000
First Calgary Financial 403-736-4000
First National 1-888-488-0794
Home Trust 1-855-270-3630
HomeEquity Bank 1-866-331-2447
National Bank 1-888-835-6281
PC Financial 1-888-723-8881
Radius Financial 1-866-550-8227
RFA 1-866-939-5005 Mortgage Numbers starting with 4
RFA 1-877-776-6888 Mortgage Numbers starting with 6
RFA 1-833-228-5697 Mortgage Numbers starting with 7, 8 or 9
Royal Bank 1-800-768-2511
Street Capital See RFA