The Coronavirus epidemic has led to a disruption in jobs and business. Firms and companies are making less profit hence the need to scale down their cash outflows by laying off some staff. In such a case, those who have lost jobs or closed businesses are wondering, “what if I can't pay my mortgage due to Coronavirus?” This article will highlight measures that governments and financial institutions are putting in place to protect those with loans and mortgages. Besides, it will also provide you with tips on how to stay afloat with a due mortgage during this Covid-19 pandemic.
Measures to Protect for those Can't Pay Mortgage Due to Coronavirus
Governments and financial institutions across the globe are putting in place measures to protect those who have mortgages and can't repay them due to Coronavirus pandemic. The measures are to ensure that financial institutions do not take away your property because you can't repay the mortgage because of Coronavirus.
United States
Various states in the US have instituted relief programs to protect their residents from actions by financial institutions for those who cannot repay their loans due to Covid-19. In California, the state government has requested all financial institutions to stop foreclosure activities to people affected by Covid-19. In Indiana, the government has suspended foreclosure actions on unpaid mortgages. In Kansas, no foreclosure actions or judicial proceedings related to mortgages will go on until 1st May 2020.
The state of New Jersey introduced 90-day mortgage forbearance to all those who can’t pay mortgages because of Covid-19. During this period, financial institutions cannot report any negative information to credit report agencies. In New York, repayment of mortgages has been halted based on one's financial hardship for ninety days to those who can't pat mortgage due to Coronavirus.
Further to the above measures, private mortgage relief programs are being offered to those who can’t pay mortgage. For instance, Ally Bank is allowing its customers to defer mortgage repayments for four months. During the period, mortgages will not attract late fee charges and no interest will accrue. The Bank of America is also allowing customers with mortgages to defer their payments. Citibank's mortgage customers are eligible for a hardship program. Fifth Third Bank's mortgage and home equity customers are eligible for forbearance period of up to 180 days. However, at the end of the forbearance period, the customer has three options; agree on a repayment plan, make a lump sum payment or be placed in a loan modification.
The UK
In the UK, the government has allowed people to defer their loans and mortgages repayment for up to three months. Banks have also come up with measures to protect their customers by introducing repayment holidays. The repayment holiday duration differs from one bank to another and individual cases. Most banks are allowing repayment relief on mortgage repayments for those who are hard hit by the effects of Coronavirus.
Canada
In Canada, six of the largest banks said they had allowed homeowners who can't pay mortgages because of Covid-19 to delay in repayment for six months. Banks such as Bank of Montreal, Bank of Nova Scotia and Toronto-Dominion Bank and Royal Bank of Canada are offering debt relief and deferral on credit card repayments to their customers. Customers affected by Covid-19 pandemic can apply for a deferral at any time for an indefinite deferral period. However, the mortgages will continue to accrue interest which will be included in the mortgage balance.
Australia
In Australia, small businesses have received six months break, when they will not repay their loan. However, interest will continue to accrue and will be included in the loan balance. However, home mortgage customers have not been granted any relief yet. Lenders are monitoring the situation and if home mortgage customers are seen to have been affected by Covid-19, consideration will be made.
Kenya
In other countries like Kenya, the government agreed with financial institutions to give people who can't mortgage because of Covid-19 a 12 month repayment holiday beginning 1st April.
How Else to Deal with a Mortgage during Covid-19 Pandemic
If you can't pay your mortgage due to Covid-19, the following are tips to prevent your mortgage provider from repossessing your home.
Talk to Your Mortgage Provider if You Cannot Repay the Mortgage
When you notice that you cannot repay your mortgage because of Covid-19, make sure to notify your provider immediately. During this pandemic, banks have put in measures such as repayment holidays and relief programs to protect their customers. You can only benefit after you have reported.
Pay What You Can Afford
Mortgage forbearance does not exempt you from repaying mortgage balance. If you can't repay your mortgage because of effects of Covid-19, make sure to pay what you can afford.
File for Unemployment if You can't Pay the Mortgage
If you can't pay a mortgage because of loss of a job due to effects of Covid-19, you can file for unemployment. Most countries and states have special programs to help unemployed people. Once you file for unemployment, you will see what options are available for you.
