04/20

Financial Advice

Housing Affordability & COVID-19: Info for Owners, Tenants, and Landlords

There’s no denying it: in the last few weeks, our lives have changed dramatically. There are no more carefree walks on busy streets, no more casual meetups with friends, and (for most of us) no more commutes to and from the workplace. Amidst all of these shifts, our homes have truly become our sanctuaries.

Unfortunately, for many Torontonians, they’re also becoming a source of financial stress. Whether you’re a home buyer, owner, renter, or landlord, you may be experiencing monetary hardship related to the costs associated with your property.

The good news is, there are a growing number of supports in place to help take some of the pressure off. Here are a few places you can turn to during this challenging time…

If You’re Unemployed

Have you become unemployed as a direct result of COVID-19? Have you lost work because you’ve been sick or quarantined due to the virus, or because you’re caring for someone who has? Perhaps you’re struggling because you’ve temporarily traded in your career to take care of your children around the clock.

If you find yourself in any of these situations, the federal government may be able to help. While employment insurance is available for those who are eligible, a newly-introduced benefit may provide substantial assistance for those who aren’t.

CREB

For applicants who qualify, the Canadian Emergency Relief Benefit (CERB) can help with housing-related costs and other essential expenses. Recipients will be issued a $2000 monthly payment for up to four months between March 15th and October 3rd, 2020.

As part of its relief efforts, the government is also extending the tax filing date to June 1st and allowing Canadians to defer payments to August 31st. Here are four other federal benefits to know about.

• $300 more per child through the Canada Child Benefit in May
• $400 (average) for single individuals as a one-time Special Goods and Services Tax Credit
• $600 for couples (average) as a one-time Special Goods and Services Tax Credit
• 25% reduction to the minimum RRIF withdrawal amount for seniors

You can learn more about CERB and other federal benefits here.

Ontario’s Action Plan

The provincial government is also stepping up with its own COVID-19 response. In addition to providing a financial boost to precious health care resources, the resulting action plan will help families with their living expenses.

Benefits include (but aren’t limited to) an extension of the Low-Income Energy Assistance Program (LEAP) to help with electricity costs.

The press release summarizing Ontario’s action plan can be found here.

Home Buyers

When the Coronavirus pandemic hit, many people were set to sell one home and buy another. This transition is bound to be more challenging now (and, potentially, more expensive). Fortunately, there are steps you can take to make it as smooth and cost-effective as possible.

If your closing dates don’t line up, you may want to consider applying for a bridge loan. This type of financing will allow you to tap into the equity in the home you’re selling to cover the down payment for the property you’re planning to purchase.

When it comes real estate transactions, an experienced agent will be your greatest resource. Look for a professional with a strong grasp of the current climate, an understanding of the full restrictions at play, and a strategic approach to buying and selling in the midst of it all.

For reference, RECO (Real Estate Council of Ontario) is advising against showings unless they’re absolutely necessary.

Luckily, alternatives do exist. Virtual tours, 360-degree walkthroughs, and digital floor plans will allow you to truly get to know a property when you’re buying—and market your home effectively when you’re selling.

Homeowners

For many Toronto homeowners who have lost income due to COVID-19, housing-related costs are a pressing concern. While the uncertainty of the current situation is bound to cause some worry, the key to finding a workable solution is staying calm and knowing your options.

Mortgage payment deferrals

On March 17th, the country’s six major banks issued a joint press release announcing steps that will help homeowners undergoing financial hardship. Most notably, they’re offering six-month mortgage payment deferrals.

While this is a welcome piece of news, you should be aware that the deferral will almost certainly only apply to your mortgage principal. In other words, interest will continue to accrue—and be added to your outstanding balance.

All of the major banks stress that they’re offering deferrals on a case-by-case basis. You can find more details about what your financial institution is doing below:

• CIBC

• Bank of Montreal

• Scotiabank

• National Bank of Canada

• RBC Royal Bank

• Toronto Dominion Bank

While applying online can simplify the process, you may need to call in to speak to a representative if you have a payment due immediately. To make the process as low-stress as possible, be sure you’re mentally prepared for a long wait. Due to large call volumes, you may be on the phone for several hours.

Other mortgage affordability options

If you’re concerned about missing mortgage payments, a deferral isn’t your only option. Here are a few others that you may wish to pursue.

Extending Your Amortization

By lengthening your mortgage repayment period, you can lower the amount you owe each month—which could provide some much-needed relief.

Using a Home Equity Line of Credit (HELOC)

An HELOC allows you to secure a loan against the equity in your home. Advantages include relatively low interest rates, flexible repayment options, and the ability to take out only what you need.

Work with your lender

Your lender may be willing to make special repayment arrangements based on your situation. If you’re calling a representative, be sure to have all potentially-relevant financial documents on hand.

Property taxes & utilities

The City of Toronto has enacted a 60-day grace period (with a start date of March 16th) for property tax, water, and solid waste bills. Late payments will also be waived for this timeframe.

Tenants & Landlords

In these unprecedented times, both tenants and small landlords are feeling the economic pinch. Cooperation will be critical to reducing financial hardship on both sides in the months ahead.

Suspended evictions

In order to protect renters, Ontario has suspended evictions due to COVID-19. As it’s not permissible under provincial law, tenants can’t be charged interest on late rental payments.

Of course, this shift may present some significant challenges if you’re a small landlord. If you’re having trouble covering the costs of an investment property, be aware that you’re eligible to apply for mortgage payment deferrals just as you would be for a primary residence.

You can stay up-to-date on eviction moratoriums here.

The message is clear

Landlords and tenants are often pitted against each other in the media, but the perception that they’re on opposing sides needs to change. Ontario Premier Doug Ford and Toronto Mayor John Tory are both urging landlords and tenants to cooperate—and find payment plans that work.

If you’re a tenant, pay your rent if you can. If you’re a landlord who will benefit from the financial supports in place, pay it forward by working closely with your renters to find solutions.

It’s a popular refrain in the fight against COVID-19, and it has the ring of truth. We’re all in this together. If you’re struggling during the pandemic, you may be surprised by how much support is available to you—and how many people and institutions are on your side. Being aware of this fact is the first step towards ensuring your ongoing financial security.

Have questions about buying or selling a home in Toronto during this challenging time? Reach out and we can set up a time to talk about it.

Adrian Mainella

Adrian is an innovator, a problem solver, and a trusted expert in Toronto real estate.

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