More Money Podcast - Special Episode - Deferring Your Mortgage Payments in Canada - Richard Moxley, Credit Expert & Author of The Credit Game

Episode Date: April 2, 2020

Due to the tanking stock market, mass job layoffs, and the pandemic, many Canadians are finding themselves in a situation where they are no longer earning an income (or now have a reduced income) and don't have an emergency fund. If you don't have any new money coming in and you don't have any money saved up, what can you do? Recently it was announced that some lenders, including the big banks, in Canada will be providing mortgage borrowers the opportunity to defer their mortgage payments. To explain more about what this actually looks like and what this could do to your credit score, I'm joined with credit expert and author Richard Moxley for this special timely episode. More info about mortgage deferrals: https://www.cmhc-schl.gc.ca/en/finance-and-investing/mortgage-loan-insurance/the-resource/covid19-understanding-mortgage-payment-deferral Make sure to support Richard and grab a copy of his new book The Credit Game: https://amzn.to/2y5UjeA Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello, and welcome back to the Mo Money Podcast. This is a very special episode that I want to put out. Now, you can also watch this interview I have coming up on my YouTube channel. I've also shared it on my Instagram, on IGTV. But basically, last week, I interviewed Richard Moxley, who's been on the show before. He wrote the book, The Credit Game, and he knows everything there is to know about credit, specifically for us Canadians. information about some of the changes that have been happening in terms of mortgage deferrals and contacting your financial institutions to see if they can kind of ease up on your debt payments and how you can work together because a lot of people are losing their jobs or their hours are being cut. They're being laid off. So a lot of us are dealing with some kind of financial stress. And so a lot of the banks are now offering mortgage deferrals and said that they will work with you to figure out a better situation so you can maybe lower

your payments or defer other debts that you have with them. So because of that, and because I feel like sometimes when you're trying to find an answer, it's not so clear where that answer is living. I thought I'd have Richard on the show so we can dive deep into this topic about mortgage deferrals and possible credit deferrals. So you have all of your facts and know exactly what to do. So that's why there's this special episode. It's a short one, but I hope you're going to like it. Make sure to, of course, check out Richard, support him and his business. Creditgame.net is where you can find him. He's also on Twitter and Instagram. And of course, support him, get a copy of his book, The Credit Game. It's honestly really great. It's a very easy read, but it has a lot of

important information. I feel like you won't really, it's the only book that I know of that really dives deep into credit in Canada and, um, you know, being smart, uh, with all of that kind of stuff. So anyways, that's it. I'm going to get to the interview right now. Thanks Richard for joining me, uh, here on so many different channels and I'm going to put this out on, um, a lot of stuff has been happening in the past couple of weeks. So I appreciate you taking the time to chat with me about some of the things that are going on, especially when it comes to credit and you are like the credit experts have been, I assume, following what's been going on very, very closely.

At kind of a high level, do you want to kind of explain some of the things that were announced last week by some of the banks and by the government in terms of credit? So the bankers association announced that all six major banks would offer deferred mortgage payments and other credit products or deferments on other credit products. Then the industry responded because there's a lot of different mortgage lenders that maybe don't fit into that major bank status. And they are doing different varieties of deferments or trying to work with clients to help them. Okay. So it sounds like in general, this is good news for consumers.

Yeah. At first glance, a lot of people got excited. Maybe a little too excited. Oh, I don't have to pay my mortgage or maybe I can just skip a few payments here or there, which isn't necessarily what the program's designed for. But the thought crossed my mind, so I'm sure it crossed a lot of people. It crossed my mind too. It did. Cause I'm like, well, yeah. I mean, one of the concerns obviously right now is, um, because I mean, me and my husband are self-employed and so like, okay, well, our income is going to definitely change this year as to compared to what we expected it would look like this year. And so we have bills to pay. We have a mortgage. Maybe this is something that we should do

looking more into it though. I'm not sure if it's actually something that we're going to do. So do you want to kind of let's talk specifically about the mortgage deferral, and then we'll talk about other kind of forms of credit. But mortgage deferral seems to be on everyone's minds because it sounds great. It sounds like you don't have to pay your mortgage for six months. What does it actually mean? It just means that it's a delayed payment. So whatever your payment would have been, they're either forgiving, not sorry, not forgiving it, but they're delaying

the whole thing or portions of the payment to a later date. So whatever your payment is, that goes to the total amount outstanding down the road. So essentially you are going to be paying more in the long run. Is that kind of right? Yeah, so the interest isn't going to stop and you're technically borrowing more, which means your payments and the amount that you're going to pay over the term of whatever type of credit product you're looking at is going to be more if you don't make those payments now. Do you have a sense of what it'll look like in terms of those future payments?

So basically, it'll look like for six months, you don't pay anything or do you still have to pay those interest payments? So that's going to depend on which lender you're with. Each lender is doing a different variety of things depending on the client. So one thing that is important to note though, is if you have your insurance, like mortgage insurance or some kind of insurance product attached to your mortgage or any kind of credit product or taxes or anything like that, that's different. So what the banks are delaying or deferring is essentially the payment. Some are deferring everything, including the interest, but the majority of them are just deferring everything.

Gotcha. So it's really important to check with your specific bank. And I guess another thing that's probably important to know is that you aren't going to be automatically approved. I think, you know, again, when this was an answer, I was like, oh, that sounds great. I'll do that. It's like, well, it's, they're not saying everybody, because that would probably be really bad for all the banks. If everyone all at once wants to defer their mortgages, can you kind of talk a little bit about what is the process like to look into this? Well, other than listening to bad music for three hours or however many hours it takes and that stupid automated voice that keeps on ringing in your ear, essentially you're going to talk to a customer service rep that is going to

explain the situation. So some of them, you know, they're asking questions like, have you lost your job? How have you been affected by COVID-19? And then they just determine what they can do for you. Others are very easy. You call up and essentially say, I'd like to defer. And they're like, okay, great. And there's nothing. So it really depends. It's lender specific on how they're dealing with it.

And as well, for those that really need this program, don't feel bad about taking advantage of it. There's some comments online that, oh, you know, the banks are going to miss out here. The banks never miss out. Don't worry about the banks. Yeah, the banks will never lose money. So essentially what is going to happen is all they are is just lending it out again and maybe not getting that full payment right now. Yeah, but they'll get it in the end.

They'll get it. Don't worry about the banks. They'll get it one way or another. They're going to be just fine. They're not going anywhere. What are some potential things that people, when they are waiting several hours on the phone, which I know I've done that recently, actually. And what are some questions people should be prepared to answer or things that they should write down so they have kind of a script so they know they can be the most efficient during that phone call because they waited three hours and they want to make sure they

answer or ask the right questions. So essentially, the message that I'm trying to get out there is to protect yourself in any way that you can. Getting anything in writing is ideal. Getting the customer number or the name of the customer service rep that you're dealing with, writing down the date and time that you talked to them. Those are all good things to do. Equifax actually has just come out and said that they're going to give free credit reports to Canadians for the next 30 days. So when you go to their website... Like digitally or do you have to mail that in? No, it's digital.

Oh, that's perfect. So TransUnion has been doing it for a while now, but Equifax is saying they'll do it free for the next 30 days. And you just go on their website and there's a little, when you see the COVID-19 or the link there, you just click that. And I just actually did it to test it, to see if it actually did work. And I actually got through all my skill testing questions, which was the first for me, But it does work. So that's good. Now, it doesn't include the score. But at this point, one of the best pieces of advice I can give is don't assume that everything is going to report how people are staying online or what

you may have heard. You need to check your credit report and track it because we don't know exactly how it's going to all look. No one can promise that. It's just a matter of you protecting yourself and checking both Equifax and TransUnion and making sure that any deferred payments are showing or are not showing up late. Otherwise, you're going to need to dispute that. Okay. So what you're saying is, ideally, and this is kind of, it seems like what the banks are promising is that they're promising, hey, yeah, you're allowed to defer your mortgage payments, and we're not going to report it to the credit bureaus that's a late payment because that is bad. That will affect your credit score. That's right. And Equifax came out with a statement essentially saying it's not us, it's them. And saying that they're really not in control of how it reports. It's the individual

lenders and banking systems that report. And because of the amount of deferred payments that are going to be happening, and the amount of just stress that this whole situation has caused on their personnel and their computer systems, I'm assuming that there's going to be an increase of errors on that. And so that's something where you're going to want to track and protect yourself, try and get as much information confirming that you are deferred and not being late. And with that, track it to make sure that everything is showing up as it should be going forward. Yeah, so we have to be extra diligent now to make sure that we are monitoring our credit reports and what's being reported. Because, yeah, like you said, I think a lot of us are probably going to look into the mortgage deferral.

Or let's talk a little bit more about other forms of credit because it seems like the banks are also saying, oh, yeah, maybe we can work with you about that. What does that actually mean? Does that also mean I can defer my credit card payments or my line of credit payments? Once again, it's up to the lender or the bank. I have heard comments and feedback from clients and just comments online that, yes, they've done it for vehicle payments and they've also done it for credit cards. Cell phone companies, all I've heard is that they're essentially extending some of their features, but no deferment from them yet. But I guess we'll wait and see. But, you know, other pretty much everything else, uh, is supposed to be reporting, but, uh, we'll see.

Okay. So it still kind of comes down to look at your situation and then contact your lender to see how they can work with you and what they might offer. And then once that's been implemented, say there's a deferred payment, or maybe they're going to decrease your payments, monitor your credit reports to make sure they're reporting that accurately and not saying that you just didn't make a payment. Yeah. And a lot of people are concerned about are currently supposed to be closing in the next few months, I would not defer your payments or any kind of credit products that you can until at least the end of April so that we know what's happening out there. Because I'd hate to say, oh yeah, don't worry about it and defer away. But then all of a sudden, now you can't close on that new purchase or that

refinance or renewal that you're looking for. And then not that it's your fault or that you've done something wrong, but now you're paying the penalty for misinformation or assuming something is going to be perfect when we don't know what it's going to be like come April. Yeah, that's really good advice. Lastly, because we are in this really stressful time, and especially now it seems like I'm hearing so many more reports and even personal stories from people that I know of loss of income, loss of a job, or cutback hours. People are really worried about their money situation.

What are some things that you, as somebody who works with a lot of people dealing with debt and credit, what are some kind of pieces of advice you'd like to share with them during this kind of weird, bizarro time that we're all dealing with? So one of the first things is the mental aspect of everything. So a lot of people are freaked out. They're afraid. And when you are in a high emotional state, your decision making is at its lowest. And so, you know, you've made some comments or posted some things about investments. You know, a lot of people are wondering what to do. Yeah.

With it's the same thing with credit. You know, yes, there could be potential job loss. However, the government is, I think, doing a great job on at least letting people know that they understand that this is a huge problem. There's a lot of support that's going to come towards Canadians that are being affected by it. And so I think in the grand scheme or the majority of the cases, I think we're going to be okay. Yeah. I, the biggest concern I have is that because of all the, this fear and the emotional behind it, that we're going to start doing like dumb stuff, like just, you know, taking all the cash out of our, you know, or or not making any payments and just cashing out

because we're assuming the end of the world's coming. That's something where obviously late payments or higher balances will lower the credit score. Not to say that don't take advantage of the deferred payments if you absolutely need to, but just monitor the system or monitor the situation, see what you can do and take it, you know, one week, one month at a time. Yes, we all want to be prepared just in case something else happens, but I think there's, you know, we're all in this

together. And so I don't think, you know, anyone's going to be severely left behind with all the different relief packages that are out there. Yes, of course, there will be some situations that are just, you know, terrible and will really suck. But most people, I think, you know, just hang in there, try and stay focused on the situation, you know, react accordingly, but try and eliminate the emotion or reduce the amount of emotion on the decision-making. Absolutely. Yeah. And I think, honestly, at least for me, I was super anxious like a few weeks ago, a little less anxious last week, a little less, you know, I think things will get better. I definitely feel like maybe it's also the weather changing. There's a lot more sunshine. I think things are going to improve.

We don't know when, but they will. So yeah, really not being emotional, not making emotional decisions and taking things, like you said, day by day or week by week. And just remember, we're all in this together. Like literally, we're all being affected by this. So hopefully that should give you some comfort. It gives me comfort that I'm not the only one freaking out. Yeah. Like if this was happening to, you know, to just

one person or a small group, I, I think the, the fear would intensify, but if there's something that you can focus on other than this, um, you know, everyone's want to write a book or, or, you know, do some project that you wish you had a couple of weeks just, just to do, you know, everyone's want to write a book or, or, you know, do some project that you wish you had a couple of weeks just, just to do, you know, find something that you're passionate about, help distract you. Cause I think that's, that's going to be the best, uh, best help is stay, stay tuned, stay in the know, but you know, don't obsess about it. Yeah, exactly. Limit your information intake. Don't be on Twitter or watching the news all the time

because it will, like I know because I was doing that a few weeks ago and it did not help and what's helped me is actually find some projects and just do them

and don't check online. Like unplug for a little bit. It's really, really important. And I guess just to give you a little plug because I appreciate you being here and sharing all your wisdom. If people want a good book to read, they can read your book, The Credit Game. So if they want to learn more about

credit in Canada specifically, I think it's a really great, honestly, I've been telling everyone to read it because there's not too many other resources quite like it that really go in depth about credit in Canada. So I think it's really important for people to read. Well, thanks for taking the time to chat with me. I'm so glad that you reached out and said, oh, we need to talk about this because there's a lot of questions I've been getting and a lot of, I think, not misinformation,

but a lot of questions left to be answered online, so I appreciate you chatting with me. You bet, anytime. And that was my special episode with Richard Moxley, a credit expert. You can find him at creditgame.net. Also find him on Instagram and Twitter. But of course, make sure to check out the original interview. I've had him on the show before. That's episode 213. That was back in the

fall when he released his book. He was also part of my Millennial Money Meetup number six. And you can watch the full panel discussion from that event that we also did in the fall on my YouTube channel, jessicamorehouse.com slash YouTube or youtube.c slash jessicamorehouse1. So of course, if you want to rewatch this and you actually want to see us, cool. It's also on my YouTube channel. So there you go. Anyways, I hope you enjoyed this special episode. I'll be back here tomorrow, Friday for another Money Minute episode. So until then, see you later. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.