Banks have stated they will enable people struggling financially, due to COVID-19, to press pause on their mortgage. Each bank has a slightly different policy, but in summary, if you have lost your job or your total income has dropped by 20%, you can request to pause your mortgage for up to six months.
This offer has been designed as a lifeline and should not be seen as a gift. Pausing your mortgage has consequences. The interest you accrue while you’re not making payments will not go away! It will be added to your loan each month. For example, if you have a mortgage of $500,000 and you normally pay $1,250 interest each month. The interest amount will be added to your loan each month. Consequently, once you resume paying your mortgage, your repayments will be higher than before and you will ultimately pay more interest overall. Contact your bank or financial advisor to learn more.