Kofsky Mortgage

COVID 19: How does this affect my mortgage?

I like all Canadians across the country am expressing concern for those directly impacted by COVID-19. I myself have a few friends that are experiencing full isolation and some financial hardship. The good news is there looks to be some payment relief coming (more on this below). Additionally, I have also been getting other questions and have compiled some information below that may be helpful.

  1. The Interest Rates – COVID 19 is having an impact on the economy and interest rates. Bank of Canada has dropped its prime rate of 1.00% in two separate (0.50%) rate announcements in March. I am happy to say that most lenders have lowered their prime rate to the most recent reduction. We are expecting a prime rate of 2.95% by the weekend with most of the lenders. This is good news but over the past year interest rates have gone up and are not at all-time lows.
    • For Variable Rate Mortgage holders, as the prime rate has fallen the mortgage rate should fallow by the same 1.00% and you should start benefiting from that on your next payment.
    • For Fixed Rate Mortgage holders, no such luck, your payment stays the same, as that is the purpose of the fixed rate. It is the certainty for you and the lender that the minimum payment stays where it is.
    • Should I break my mortgage and renew it early? The answer to this one is maybe. There are potential savings to be had but there is potential for big penalties and these penalties can vary by the lender, the type of the mortgage and the duration of the term. I can take a look if there are savings for you, just call me or send me an email.
    • Should I switch my Fixed to Variable? The savings that variable rate mortgage holders are enjoying, do not necessarily apply to new business. The lenders do not want a flood of fixed clients becoming variable. They stop this from happening by not allowing the discount to ‘new business’ in these scenarios.  
  2. Your Term Is Ending – If your mortgage is renewing, this is not the best time to jump into anything without analyzing your options. Take a second and remember that the lender is there to get you to sign on the dotted line and then move on to the next renewal. Please consider these questions before you renew:
    • Are you happy with the service of your existing lender?
      • Do you need more or better service?
    • Do you want to have access to your equity?
    • Do you have any immediate need for money, or wanting to do any renovations, debt consolidation within the next 18 months?
    • Do you see yourself living in the home for the next 5 years?
      • Are you getting married?
      • Is there an addition to your family coming?
      • Could you be changing your job?
      • Etc
  3. Payment Relief (for most of you) – Some lenders have just announced SKIP a payment and HOLD a payment options. For example, if you have an MCAP or RMG mortgage, both announced these options last week. In addition, Canada’s big six banks (RBC, TD, BMO, Scotiabank, CIBC and National Bank) will allow mortgage payment deferrals for up to six months and some relief on other credit products to help their customers struggling with the financial impacts of the coronavirus.
  4. Payment Relief (for those with insured mortgages) – If you or anyone you know purchased a home with less than 20% down and your mortgage is insured.  The Canada Mortgage and Housing Corporation (CMHC) has recently communicated that they would provide a payment deferral period for those affected by the COVID – 19 outbreak.
  5. Other sources for help – if you are looking for other potential options that may help you or your family during this time, please click here for the federal government website

If you are interested in a quick call to go over your options or just have a couple of questions feel free to connect with me anytime. My number is 604-202-9913, I am happy to help.

Jordan Kofsky
[email protected]