You have heard it before, and you will probably continue to hear it for some time to come, these are unprecedented times we are living through. For the first time we are experiencing a health crisis, stock market crash and global lockdown all at the same time.  So, what are we to think and do?

Following are the steps taken by the Federal and Provincial governments to help the Canadian economy from drowning and possibly going into a relapse, steps any good life guide would take:

  1. Toss a life saving device
    https://www.canada.ca/en/department-finance/news/2020/03/canadas-covid-19-economic-response-plan-support-for-canadians-and-businesses.html
  2. Get back up
    https://www.canada.ca/en/public-health/services/diseases/2019-novel-coronavirus-infection/canadas-reponse.html
  3. Help from behind
    https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html
  4. Use a life Jacket
    https://www.narcity.com/news/ca/who-can-apply-for-cerb-if-youre-choosing-not-to-work-youll-have-to-pay-it-back
  5. Look for signs of secondary drowning
    https://news.ontario.ca/opo/en/2020/04/ontario-unveils-guiding-principles-to-reopen-the-province.html

 

As I review all the strategies being implemented on our behalf, I cannot help but think of the adage, ‘One size fits all”.  However, in this case, there are some people that will not benefit from any of the programs mentioned above, because one size does not fit all.

One program I would like to touch on not mentioned above, is the Mortgage Deferral Program.  If you have chosen to take advantage of this program, there are a few things you need to be aware of.

  1. Your payments are being deferred not cancelled, therefore, you will have to make up those payments at some point.
  2. Interest – while interest on a mortgage is calculated every six (6) months, it is spread over the twelve months period, and will continue to accumulate (compound) over the deferral period.

Depending on your financial circumstances, you may choose to pay interest only instead of deferring your payments.

Another option is to speak with your mortgage specialist about your early renewal option to take advantage of the lower interest rate – The 5-year variable is below 2% and the 5-year Fixed rate is around 2.6 -2.7%.  If your current rate is above this, it is worth having the conversation.  Deferring your payment is a band-aid effect that may cause you greater pain in the end. Act today to ensure you are not forced out of your home.

Many of you may be too young to remember the high interest rates of the 1980’s and it devastating effect on many homeowners.  We are not experiencing high interest rates today, but rather high unemployment and deployment which can have similar effects.  I remember working at the bank where clients were just walking in and leaving the keys to their homes on the counter.  They were not waiting on the banks to foreclose on them, they were being proactive, or so they thought.

The ones who were truly being proactive, took steps to maintain their home ownership – they took a hard look at their expenses, and made the necessary adjustments – deleting non-essential expenses – making the necessary sacrifices knowing that in life there are always sacrifices; some took on two or more jobs.  What steps are you going to take to ensure your livelihood?  What are your absolutes?  Those things you wish you did not have to give up, but could do without?

These are all temporary measures to help you get to the other side feeling good about yourself and your accomplishments (short-term pain, for long-term gain).

“You must never confuse faith that you will prevail in the end – which you can never afford to lose – with the discipline to confront the most brutal facts of your current reality, whatever they might be.” Admiral Jim Stockdale (as quoted by Jim Collins, Good to Great).