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11 May

The Art of Defending and Strengthening your Financial Position in the age of COVID-19


Posted by: Garth Chapman

During this time of financial disruption people are and should be seeking to shore up their financial position, just as businesses are looking for ways to strengthen their Balance Sheet.

A popular option in the past has been to refinance homes to either take advantage of lower interest rates or to pull out equity as a source of extra funds. But in an unprecedented situation like the one we’re now dealing with, the refinancing landscape can look quite different than it has in a long while.

Here is some information from the article I will provide a link to at the bottom of this post.

“Does the option to refinance property work the same for me today?
The short answer: It depends. Everyone’s situation and circumstances are different, but qualifying is not as easy as it was before. In the wake of the COVID-19, refinances have been tougher for Canadians for a few reasons.”

Due to declining employment, lenders are more wary when it comes qualifying income. With record job losses in March and the grim outlook of Canada’s future unemployment rate, lenders are digging deeper into current employment status and the stability of future income.

If a borrower is self-employed they may also need to provide a description of their business, its current status, and reasonable proof that it can withstand the effects that will come with COVID-19. In addition, lenders will not use any temporary government benefits towards qualifiable income, but they recently started considering Child Tax Benefit as qualifiable income, which can be very helpful.

While private lenders are also being cautious by lowering LTV ratios or requiring interest pre-paid for all or part of the term, they are also providing much needed solutions to buyers and homeowners during this difficult time.” 

The decision-making criteria for Canadian Homeowners on this is quite clear

If you think you may want or need to have access to more capital in the coming months or years, then get it done now, as it appears that financing will continue to become tougher to get as time goes on.  Remember, once it’s too late…it’s too late.

Read more: Refinancing in the age of COVID-19