Consumers have options available if they continue to have concerns over their mortgage payments.
The Financial Consumer Agency of Canada (FCAC) provides unbiased and fact-based information to assist Canadians in making informed financial decisions, relevant to their circumstances. In support of this important role, FCAC has made information available on mortgage deferrals to help consumers understand their options as the mortgage deferrals introduced in the initial stages of the COVID-19 pandemic begin to expire.
FCAC’s role is to protect financial consumers by strengthening the financial literacy of Canadians and promoting the compliance of federally-regulated entities, including banks, with their legislative obligations, codes of conduct and public commitments.
Financial institutions introduced various payment relief measures to support Canadians experiencing financial hardships caused by COVID-19, including mortgage deferrals. FCAC is monitoring and tracking these public commitments by collecting weekly statistics on the relief measures on credit products from the financial institutions that it regulates. Specifically for mortgages, as of September 4, 2020, federally-regulated financial institutions provided over 771,000 mortgage deferrals for an average period of 6 months.
As mortgage deferrals begin to expire, FCAC encourages consumers who foresee challenges in making their payments to speak with their lender about available relief options. Some consumers may be eligible for extended relief from their financial institution on a case-by-case basis. Other options for consumers include extending their amortization period (the length of time they have to pay off their mortgage in full) or opting for an early renewal to benefit from a lower interest rate. However, it is important for consumers to know that they may have to pay fees if they make changes to their mortgage contract. Before making any decisions, consumers should understand their options and know the associated fees. FCAC’s advice for consumers who may have trouble with their mortgage payments is to contact their lender to inform themselves of the options available then weigh the pros and cons of the options they are considering before making a decision.
One helpful way to manage finances during challenging times is to create a personalized budget. FCAC encourages Canadians to use its Budget Planner. The tool provides tips, guidelines and suggestions. Budgeting and having a financial plan are associated with better financial outcomes in areas such as managing day-to-day finances, saving, and paying down debt.
FCAC will continue to support Canadians by providing timely and relevant information to help them understand and manage their finances as the country transitions into economic recovery.