With the development of the novel coronavirus (COVID-19) pandemic, many Canadians are struggling to pay their bills — including rent or mortgage payments.

An Angus-Reid survey showed that 1 in 3 Canadians worry they’ll miss a rent or mortgage payment due to COVID-19.

A survey from the Canadian Federation of Small Businesses found that 23% of 9,000 respondents couldn’t pay their rent or mortgage on April 1.

While some banks and lenders are offering mortgage deferrals, this is on a case-by-case basis and isn’t always a perfect solution. The Toronto Star reported that interest may continue to be charged. One Canadian told the Star that he could defer his mortgage payments for six months but would end up owing thousands of dollars more in interest over the course of his loan.

Tenants don’t necessarily have even this assistance available. While there is some emergency financial relief coming from the federal and provincial governments in Canada, it may not be enough to pay rent in full, especially for those who live in more expensive cities.

What can you do if you’re in this position? There isn’t an easy answer, but there are some options that could potentially help.

For Mortgage Holders

For those who own their own home, there are several options to consider.

Talk to your lender

First, if you haven’t done so already, you can speak to your mortgage lender about options for relief during this time. While not all assistance is beneficial in the long-term — as the Toronto Star reported — it’s possible your lender will be able to offer a better option.

If you are in a pinch and the only option is to take a deferral in the short-run with more interest in the long-term, it may make sense for you to take this offer and make a plan for the additional interest payments. Since you know that it will be coming, you can set aside funds for the payments once you are back on solid financial footing.

However, there are other options you can consider as well.

Refinancing your mortgage

With lowered Canadian interest rates, it could be possible for mortgage holders to refinance their mortgages at a lower rate or at a variable-rate (vs. a fixed-rate mortgage where your payments always stay the same). If you have the equity available, you could refinance for a lower rate and use the difference to cover your payments in the interim.

You could also be eligible for a home equity line of credit, which could free up some funds in the short-term.

Learn more about mortgage refinancing: https://www.debtcare.ca/pros-cons-refinancing-your-mortgage-renewal/

Dealing with debt and other financial obligations 

Another option is to look beyond your mortgage and rent to your other payments. What else are you obligated to pay?

For instance, many Canadians carry a large amount of high-interest credit card debt. Trying to make credit card payments and your mortgage payments with a drop in income could be even more difficult.

Take a look at your other expenses and ask what can be done to lower your overall debt. Can you cancel subscriptions or find savings in other parts of your budget? Other lenders are offering relief during this time, too. Even if you can’t get a break on your mortgage, you may be able to settle other debts to make up the difference.

You can also consider other measures, such as debt consolidation or even filing for insolvency – bankruptcy or consumer proposal. While it is not always possible to keep your home when you do this, that isn’t always the case. Talk to a debt counsellor who can help you figure out what risk there is to your current residence.

For Renters

Renters don’t have quite the same options as mortgage holders, as they are typically negotiating with a landlord versus a lender. While many across the country are calling for a rent freeze, nothing has been announced yet. However, there are still opportunities that keep you protected.

Talk to your landlord

If you haven’t already done so, talk to your landlord about options for deferring or pausing rent payments. While you can’t negotiate the mortgage payments, they may be able to (see options above).

Even if they are reluctant, some landlords in Canada have accepted half the rent payment instead of the rent in full.

If your landlord is not open to negotiation, you will need to look to other assistance.

Look into provincial rent assistance

While not every province has announced rent relief for tenants, some have released measures.

According to CTV News, the B.C. government is providing up to $500 as a rent rebate to those who have experienced a significant drop in their income due to the outbreak.

In Ontario, New Brunswick, and Nova Scotia, landlords are not allowed to evict tenants. However, this doesn’t necessarily mean they can’t hand out eviction notices, as reported by Toronto.com. In Ontario, for example, landlords can still give out eviction notices, but Landlord Tenant Board (LTB) — the body that enforces eviction orders — hearings are on hold for the time being.

Prince Edward Island also announced a temporary rental assistance benefit of $1,000 per household for a three month period. Eligible candidates will receive $500 in the first month and $250 the following two months.

Deal with debt

Similar to mortgage holders, look beyond your rent payments to see where you can cut costs in other areas.

If you are making payments to an unsecured line of credit, for instance, perhaps that debt could be settled and the funds freed up for rent payments. If you can negotiate other payments — such as your car insurance — you can put all possible resources towards making your rent payments in the meantime.

If your income has been reduced, it can actually be better for debt settlements as they are often based on income — so you may be able to get a better deal now than when your income returns.

Speak to a debt counsellor to explore your options in full. A qualified counsellor can help pick the best option for you.

In Conclusion

This is a difficult, unprecedented situation and there aren’t any easy answers.

However, it can be made easier with assistance. At DebtCare Canada, we have helped thousands of Canadians reduce and restructure their debt, access financial help, and more.

We are open fully remotely during the COVID-19 pandemic. If you’re struggling with mortgage or rent payments or other bills, please get in touch so we can help you find a way through.

Call: 1-888-890-0888
Text: “Help” to 1-888-890-0888
Fill out an online contact form or learn more: www.debtcare.ca.