Financial Fitness

I can’t pay my bills because of COVID-19. What do I do now?

By Interior Savings
March 27, 2020

There is a lot of uncertainty right now, which ultimately leads to anxiety and stress. There’s no doubt that your newsfeeds are filled with government news updates, home workouts, stories of empty toilet paper shelves, and DIY projects to help you stay busy at home. Some of this information is helpful… some not so much.  With things changing so rapidly, we want to ensure that our members are staying informed and are armed with the knowledge they need to get through these tough times.

First off, it’s important to remember every member is in a unique situation and what makes sense for one person, may not make sense for another. However, this doesn’t change the fact that no matter what changes you’re facing due to COVID-19, our team is here to help you financially get through this. Terms like “mortgage deferral” are getting tossed around – but what does this actually mean and how will it impact you?

Let’s break it down.

I can’t pay my bills because of COVID-19. What do I do now?

If you are facing job loss, pay disruption due to childcare challenges, or other loss of income and you’re worried about your ability to cover your loan costs and take care of yourself and your family, payment deferrals might be the right solution for you.

 

What actually is a payment or mortgage deferral?

Payment deferrals (also known as skipping payments) can provide short term financial relief – allowing you to pay your debt later so that you can afford to pay for your essential needs now.

 

I think I need to defer. Is there anything I should keep in mind or that you recommend?

There are a number of things you’ll want to consider when looking at payment deferrals and our team is ready to help you understand your options. For instance, how many months you should defer (1 month up to 6 months) and whether you should defer your entire payment or keep paying the interest portion.

The first thing we’ll recommend, depending on your financial situation, is continuing to pay your interest costs and defer only the principal.  This means it could take you longer to pay off your mortgage but you won’t accrue any extra interest costs.

If you do need to defer your entire payment (principal plus interest), it’s important to know that the unpaid interest is added to the principle balance of your loan.   This means you will likely have a higher principal balance when you need to renew your loan. Also, though it may not be a substantial amount, future interest will accrue on this higher balance.

For loans, the loan may not be paid off at the end of the existing term and a renewal may be required.

 

Wait… so deferring payments could cost me more in the long term?

Not necessarily, but it can.  It depends on a few things.  For instance, as we mentioned above, if you defer your interest as well as your principal, while likely not substantial, you can accrue additional interest costs. Every member’s situation is different; your Interior Savings representative will work with you to help you understand your options and choose the one that will best serve you today and in the future.

 

Are there any extra fees for deferring or changing my payments?

No, fees associated with deferred mortgage payments have been waived at this time.

 

How do I get started?

The easiest way to get started is to have a conversation with a financial expert who can look at your situation and help you find the best solution for your individual circumstance. You can Book a Phone Appointment and get the advice you need, while still practicing safe social distancing.

 

Don’t forget to take advantage of all of the government resources available at this time as well. As we receive information on new government programs and relief measures, we will continue to share updates at www.interiorsavings.com/COVID-19

Resources for personal members

Government of Canada support

BC Emergency Benefit for Workers

BC Hydro Payment Deferral

ICBC payment deferrals

Student loans repayment deferral

Employment insurance benefits

Rental Supplement Program

Guide to managing debt

Connect to community services – call 211

Resources for business members

Tax relief for businesses

Business Credit availability program (BCAP)

Resources for Small Businesses