Five Tips to Recession-Proof Your Mortgage

As the housing market heads towards a pandemic recession, there are no accurate guesses about how the future will hold for mortgages. Moreover, the Canadian Mortgage and Housing Corporation (CMCH) announced its plans to tighten lending rules to protect lenders from potential risky defaulters. However, some mortgage specialists who have kept an eye on the fluctuating market and economic conditions, believe that there are some helpful ways to capture mortgage opportunities during these unprecedented times before the market situation resumes to normal. For a mortgagor, you may find the whole situation confusing, but every dark cloud has its silver lining even during a housing market crisis. To help you strike the most productive mortgage deal, Home Resolution has listed five tips to recession-proof your mortgage. Keep reading to know what they are.

Tip #1: Re-amortize your mortgage
If you’ve used prepayment privileges to reduce your amortization, you can now increase it back to your original amortization amount to reduce your monthly payments. This will decrease your mortgage payment and provide temporary help until we head towards a more certain time.

Although there is no cost to re-amortized your mortgage, each bank or lender may treat this strategy differently as an alternative to deferring payments. You need to call your bank or lender and ask about this process or re-amortized your mortgage.

Tip #2: Stop the accelerated payments
If you find yourself struggling with monthly payments, you can reduce the current amount until you are financially sorted to go back to your original payment setup. Till your cash flow improves every month, it will allow you to better manage your money for more urgent needs. Again, there’s no cost to do this, so head to your bank or lender and ask them to change your monthly payment frequency to non-accelerated payments.

Tip #3: Refinance an existing mortgage
You can increase your cash flow by consolidating high-interest debt into a low mortgage interest rate. Use this tip and avoid giving your money to lenders who charge a high-interest rate on your mortgage. Depending on your mortgage penalty, there is no out-of-pocket cost as your home’s equity will cover it. On Home Resolution, we have a refinance mortgage calculator to help you figure out your potential savings.

Tip #4: Renew your mortgage early
To get the best interest rates and borrowing terms, review any mortgage renewal offer with us, it will cost you nothing. In case your bank or lender offers an opportunity to lock in a mortgage maturing option in the next twelve months, book a discovery call with my team by clicking here!

Tip #5 Deferral program or skip-a-payment
If you’re facing financial hardship due to the current situation, this is a discretionary tip!

a. If you have property taxes, it can’t be deferred.

b. Payment deferral won’t hurt your credit score.

c. Banks or lenders will re-evaluate on a month to month basis if you’re eligible to use this program.

d. Be prepared to submit some proof of distress if you’re considered eligible.

e. DO NOT MISS A PAYMENT, call your bank or lender first if an unlikely situation occurs.

f. As of now, this deferral program or skip-a-payment doesn’t include rental properties.

g. Nothing is free! So in time, you will end up paying the deferred interest back and then some, so be smart about it.

If your cash flow is hurting, use this program by keeping in mind the above tips. If you are in doubt, book a call with us.

For more tips on mortgages, reach out to Home Resolution in Richmond Hill. We are an alliance of independent realtors, mortgage agents, real estate lawyers, and other home service professionals that aim to deliver the highest standard of housing solutions with successful strategies. We focus on providing excellent customer service and believe in building strong relationships with our clients to understand their financial goals and guarantee work towards their needs. Our office is in Markham for our services in real estate, and we serve clients across Ontario and the Greater Toronto Area.

To learn more about our mortgage services, please click here or get in touch with us by clicking here.