I have had numerous calls from clients anticipating they may need to defer their Mortgage Payment and how they should proceed. This is what you need to know:
Most institutions are prepared for Mortgage deferral plus other loan payments and are willing to work with their clients over the next few months. However, this is not free money, the deferred payment will be added onto your existing mortgage plus interest, so if you don’t need to defer wait until it is absolutely necessary.
As far as Private 1st or 2nd Mortgages, you may have difficulties postponing your payment. I hold a number of private mortgages and I would definitely work with my client to ease their burdens during this difficult time but not all lenders will. Do ask what the charge will be for the deferred payment.
We still don’t know if deferring a payment will affect your credit score but under the circumstances, your credit should not be affected. To ensure your lending institution doesn’t report your payment as late, they need to take action not to report any derogatory/missed payment info to the credit bureaus. Generally speaking, 1 missed payment drops your credit score by 20-40 points. Here are some tips to keep in mind:
- Request electronic or written confirmation that the payment is being deferred
- Get the employee number or service rep’s name that confirmed your deferred payment plus the date and time of your conversation
- Track both your Equifax and TransUnion credit reports for at least the next few months
- If you do see an error, reach out to your lender and the credit reporting agencies to open up a dispute
With regards to Rental Payments, a number of large condo owners will work with you at this time but if you rent from an individual, you may have difficulty deferring your rent payment. They may need your rent payment in order to make their mortgage payment. Possibly you can negotiate a reduced payment based on your cash flow and make up the difference when you are back to work.
It is good to be proactive and if you anticipate any financial hardships and not being able to cover your payments, contact your lender and if I can be of any service to help you through this process, please reach out at any time. Possibly we can look at consolidating all your debts into one and get you some extra monies to carry you through the next 6 months.
Colleen Saunders is a 25 year veteran in the mortgage industry, serving Oakville, Burlington, Mississauga and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more