Home Equity Loans For The Unemployed
Home equity loan lenders approve applicants based on the value of their houses compared to how much mortgage they have paid off.
With the Canadian economy in a lull as non-essential businesses remain closed to slow the spread of COVID-19, nearly two million Canadians filed for unemployment in April and many are faced with the challenge of balancing and prioritizing bills as they become due. At the request of the federal government, banks have begun to work with Canadians to grant credit card payment deferrals on a case-by-case basis.
The decision to defer credit card payments depends on your personal finances. In general, it’s best if you can keep up with your bill payments and other financial obligations because they will still be owed regardless of whether or not you defer them. Deferring any kind of payment will simply put off the financial obligation and make it bigger in the future.
That being said, the COVID-19 pandemic has caused financial distress for many people. For this reason, you may have no other choice but to defer your credit card payments. It all depends on your unique financial position. Make sure to assess your finances before making a final decision.
Click here to see if you can get a mortgage deferral due to COVID-19.
A credit card payment deferral allows you to hold off on making payments for a specific amount of time until your financial position improves. To be clear, the amount you owe is simply deferred and not cancelled. You will be expected to continue making payments once the deferral period is over.
When determining whether or not to arrange for a payment deferral, it is crucial to understand the true cost of doing so. There may be fees associated with payment deferral plans and understanding what those fees are will go a long way in your decision to either make the minimum payment or to request a payment deferral.
In addition, experts caution that using payment deferral offers may enable discretionary purchases or spending. Doing so will only add to the existing balance, which is accruing interest, and inflate your financial burden. In short, deferring your credit card payments should only be used as a last resort.
To arrange a deferral for your credit card payments, you will need to contact your bank. While deferral terms and processes vary for each bank, they all have a few common requirements:
The five largest retail banks in Canada are encouraging those facing financial hardship as a result of COVID-19 to contact them directly to discuss the different options available for assistance.
Click here to learn about the government CERB program.
While deferring your credit card payments may seem like a straightforward solution, there are several factors to consider before doing so.
In addition to deferring your payments, most lenders have different programs available to assist those running into financial difficulties. The most common credit card assistance options are listed below.
For those carrying a large balance on their credit card, a payment deferral may not be ideal as you would be increasing the time it takes to pay off the amount while incurring increased interest charges. Below are some alternatives to deferring your card payments.
Everyone’s situation is unique and there are many different paths to achieving financial freedom. Evaluate your options carefully and select the one that is right for you and your budget.
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