How COVID-19 is Affecting Your Mortgage
The COVID-19 pandemic has been at the forefront of all of our minds over the past week. Even before it arrived here in Alberta, it had begun to affect all of our lives in unexpected ways. In this post, I’d like to provide you with some information on how this may affect your mortgage and hopefully ease some of the stress you may be feeling.
Your Current Mortgage:
We are lucky to live in a country where community is a priority. Many of our lenders and insurer partners are reaching out to give their customers a variety of options to help mitigate the financial impact Covid-19 may have on households. You can rest assured knowing that lenders are preparing to work with you in the coming months to help you make your payments.
Depending on your lender, you will have one or more of the following options available:
- Deferral of payments
- Re-amortization of the loan
- Capitalization of outstanding interest & costs
- Special payment arrangements
If you need assistance with your mortgage payments, please contact your lender to discuss your options before you miss a payment. For a full list of lender customer service numbers, visit the Dominion Lending Centres Head Office Covid-19 page.
Your Upcoming Purchase:
Now for some good news. Mortgage rates are excellent right now! The Bank of Canada has lowered the overnight rate from 125 to 75 bps and mortgage rates followed. Click here to view current rates. The downside to this is that review times for new mortgage applications will be longer. Everyone is eager to take advantage of low rates, but this does mean a higher volume of applications. Our lenders have excellent online platforms for their employees, which means that their staff have the choice to isolate without affecting their ability to process your application. That being said, please ensure that your real estate agent includes a minimum of 10 business days before your condition of financing date to allow extra time for review.
If you have a closing date coming soon and have not met with your lawyer yet to sign the mortgage documents, please contact them to ensure they are still accepting in-person meetings, as this is mandatory prior to your move in date.
OSFI has also announced that the previously proposed changes to the B-20 benchmark rate that were to take place on April 6th for insured mortgages have been suspended until further notice. This means that mortgage qualification will continue to use the Bank of Canada’s 5-year posted rate.
Your Refinance or Early Switch:
Many people are taking advantage of low rates by refinancing their home to pull out equity, or to switch their mortgage early to save on interest. It’s a great time to do so, but there are a few factors to keep in mind.
- Your early payout penalty: All closed term mortgages have a payout penalty for ending the term early. How these are calculated depends on the lender. My fellow DLC Agent, Geoff Lee wrote a really great blog explaining the different calculations, click here if you’d like to read it. If your mortgage is with a major bank or credit union, I highly recommend finding out what your penalty would be before moving forward with either of these options. If you are in the process of changing your mortgage and have already received a quote, you’ll need a new one as the penalty is subject to change.
- Your Appraisal: We are already getting reports of appraisal turnaround times being higher than normal. Keep in mind that appraisers may decide to postpone or cancel appointments to protect themselves and their families from exposure to the COVID-19 virus. Please understand that we need to support these choices. Our lenders are always looking for ways to work with you on these issues, but in some cases we will need to wait until an appraiser is available to view your home before the appraisal can be accepted.
- Signing Documents: Most lenders will accept e-signed mortgage commitments, but require an in-person signing to be done either with your lawyer or with a First Canadian Title Agent prior to your new mortgage closing. Again, this will be dependent on each company’s policy for in-person meetings and we need to be supportive of their decision to protect employees.
This is going to be a trying time for all of us, but we’re all in this together. If there is any way that I can make this easier for you, please contact me. Stay safe and wash your hands!