Alex McFadyen, rockstar mortgage broker and partner at Thrive Mortgage Co. joined me in a video interview to answer a few questions many of my clients have about their current mortgage situation. Synopsis below, but watch for more details!

How does Mortgage Deferral work?

It depends on the institution you’re working with, but in general, the lender takes what you would have paid down on the mortgage (principal and interest) and adds it onto the end of the loan, so you will end up accumulating more interest at the end.

There are other combinations including adding a second mortgage behind your property and skipping payments and doubling up later.

Is it a good idea to defer my mortgage?

Mortgage deferral isn’t right for everyone and is completely subjective to your situation. What I suggest is that you look at a few key factors:

  1. Do you need it right now and are you working?
  2. Have you built up a budget and are there things you can eliminate?
  3. What are the long-term implications? For example, how will it affect your credit?

What are the long-term effects on your equity?

Equity is the difference between what you owe on your home and what your home value is. Essentially, you’re adding more interest onto your loan, therefore you’d reduce your total equity.

Are all institutions offering the same program for deferring?

Some are offering up to six months deferral for those who qualify with proof of hardship; some are allowing skipped payments; others offer to put your payments into a reserve fund behind your mortgage, adding a second mortgage.

What is the best thing a client can do right now?

Reach out to professionals like us who are unbiased. It’s beneficial to banks to defer mortgages as they’ll make more interest.

This is the perfect time to do a mortgage checkup. It’s also possible to consolidate debts and drop your monthly payments.

We offer a lot of options, but we suggest you talk to use before it gets too late.

I’ve consolidated my debt, now what do I do?

This depends on the strategy – as we are strategic-based. We can set up a ‘now plan’ and an ‘after plan’ – considering long-term goals to help save more interest. We also have an exit plan for once things return to normal.

What is the best rate out there for a 5-year term mortgage?

Interest rates fluctuate, so what I suggest is consider a variable rate mortgage. You can convert into a fixed rate mortgage later – variable rates automatically drop if banks lower key interest rates.

Feel free to reach out to Alex and Thrive Mortgage Co. for more information on mortgages and financing, and get in touch with me if you are wondering what your home is worth or are looking for property.