COVID-19 financial questions: deferring payments, mortgages and investment opportunities
|globalnews.ca 29 Mar 2020 at 12:39|
The Canadian Government announced a mortgage deferral program in March to help those who cannot make their monthly payments. The big six banks in the country: Bank of Montreal , CIBC , National Bank of Canada , RBC Royal Bank , Scotiabank and TD Bank also say they will allow mortgages to be deferred for up to six months.
“All banks are different, but typically they will take the interest payment and spread it out over future payments or perhaps even the life of the mortgage,” said Rob Tétrault with Canaccord Genuity Wealth Management. “They might actually tack on some payments at the back-end as well, but you are avoiding the principal payment for now, and you’re deferring the interest payment until a future time.”
Before deferring any payments, financial experts say to check with your lender about their deferment options to make sure they are available. Generally, defaulting on payments would hurt your credit score, however, if you were given the green light you should be okay.
“If a lender has given you permission to make payments, without penalizing you, then they should not be reporting that to your credit bureau, so you want to make sure you’re checking your credit regularly,” said Kelley Keehn, FP Canada Consumer Advocate.
Keehn noted that if you are making arrangements through a bank, it could take up to 30 days for the reporting to come in.
An option to help reduce financial stress right now, if you have too many bills and not enough cash flow, may be to defer some payments. Deferring certain types of bills first could help you get on your feet in the long run.
With mortgage deferral plans in place by the big six banks in Canada and an agreement made by the federal government, this would be the best first option to take.