Deferring mortgage payments has received a lot of media coverage as an option during Covid-19. This can be a great choice to improve cash flow, and even assist borrowers to pay off their other higher interest consumer debt (such as credit cards and lines of credit), instead of paying off their low rate mortgage.
But deferring your mortgage isn’t a “free” option. Interest still accrues. In most cases the lender will take the interest that would have been paid, compound it, and add it to your monthly mortgage balance. Upon maturity of your mortgage term, the payments will be calculated moving forward based on the higher mortgage balance.
During Covid-19, many people are worried about how deferring mortgage payments will affect their credit rating. The credit bureau is working hard to ensure that your credit report is accurate if you’ve deferred payments with your bank or lender. The credit reporting agencies, lenders and the government have said that pre-arranged mortgage deferrals will not negatively affect your credit rating.
But, it’s still a good idea for you to check your own rating, and ensure the reporting is accurate. That way if you catch something you think is incorrect, you can contact the credit bureau and have it fixed.
You can get a FREE CREDIT REPORT HERE
And if you see something you’d like fixed, you can call Equifax at 1-877-323-2598
Doug Neufeld, BBA, AMP
Senior Mortgage Planner
Dominion Lending Centres – Mortgage Negotiators