Newsletter April 2020-1

Lately I have been sending emails much more often than before. I really want to keep you up to date with the changes, and changes occur almost every day.

1. CERB – Canada Emergency Response Benefit, how to apply to it, and who is eligible for payment?
2. Mortgage payments. How quickly can you get an answer to your request?
3. Many ask what will happen to the housing market?
4. How can we help you in 2020?

And now a little more:

1. CERB – Canada Emergency Response Benefit, how to apply to it, and who is eligible for payment?

On the main page of our website, in the upper right corner, we placed a banner – link to CERB. https://www.totrov.com/en/home-en/
In this link, you can read who is eligible for receiving money for this benefit, and right there you can apply for Canada Emergency Response Benefit via the Internet or by phone.

CRA requests to submit applications on the days that are allocated to you according to your month of birth.

If you were born in January, February or March, you should submit an application on Monday.

Those, who were born on April, May or June – on Tuesday

Those, who were born on July, August or September – on Wednesday.

Those, who were born on October, November or December – on Thursday.

Everybody can submit an application on Friday or weekends.

All who have suffered due to COVID – 19, can count on support, if they qualify for such benefits and if they are full-time payroll employees, self-employed, business owners, temporarily residing in the country, holding work visas.

You must be over 15 years old, earn at least $5000 in the last 12 months.

You may be also eligible, if you are fired or laid off at work, if your work hours have decreased and become less than 10 hours a week, even if you are a self-employed person.

Many people worry, especially those who run their own business or just are self-employed. If you really began to work less or stopped working at all, then do not be afraid, apply. No one will ask you to pay back unless you cheated when answering questions.

I checked, went to the Service Canada website through CRA. It turned out to be not difficult. But the Service Canada website did not work on Thursday morning, 04/09/2020, maybe because everyone tried to go to it at the same time. Of course, everything will be adjusted, corrected and everything will work as expected.

If someone has not yet made access to websites CRA or Service Canada, it is advisable to do this and not only for the purpose of obtaining CERB. You can always have tax documents at hand (sometimes they are required for obtaining a mortgage), see what the size of the future pension is, etc.

Families with children under 12 years old or children from 0 to 21 years old receiving disability tax credit may receive support from the Government. You can view information and apply for this link: https://www.ontario.ca/page/get-support-families.

There is also support for businesses and you better contact your accountant who serves your company.

For a general information, I attach the link of the Business Development Bank of Canada: https://www.bdc.ca/en/pages/special-support.aspx?special-initiative=covid19.

2. Mortgage payments. How quickly can you get an answer to your request?

As we all know, banks are now accepting applications for deferred mortgage payments. We already mentioned in a previous letter that we have links to all websites of banks, from where you can apply for deferred payments.

If you have not yet found how to apply to your bank, write us the name of your financial institution and we will send you a link.

Different banks work in different ways: someone gives a deferral for all 6 months at once, someone only for 3 or 2 months, and there are banks that tell you to fill out applications on a monthly basis. But, in any case, financial support will be provided to you.

Please remember that the process of a bank system installing into computer is time-consuming, if you have to pay for mortgage soon, make sure that you have money in your account for the first payment.

Although the banks reported that they would not be charging people for having missed payments and that they would not place information about non-payment in credit bureau, all the same, the banks are different, and I do not know how they would respond to non-payment. I am certain of one thing: if they receive information from you that you cannot pay, they will meet half-way.

By the way, you can also apply regarding deferring payments on commercial mortgages, but I noticed that banks allow not to pay only that part of payments that goes towards your debt (principal), but interests have to be paid anyway.

I would like to remind once again that after the expiration of the 6 months period, you will not need to make a double payments on mortgage. Some are worried about this, so I’ll show you how it works with an example. For example, you have a mortgage of $400,000 and regular payments of $2,000 per month. $1,000 goes to the bank for interest and $1000 goes to pay off your principal. If you do not pay your mortgage within 6 months, then the amount of debt does not decrease. The situation when you do not pay interest to the bank in the amount of $1,000, leads to the fact that this thousand is added to the amount of debt of $400,000 and after 6 months you will owe $406,000. Then you start to pay, but interest will already be calculated on $406,000, which will not greatly affect further payments.

3. Many ask what will happen to the housing market?

I can’t be 100% sure, and the problems in the world are not over yet, unfortunately. But I can express my opinion. Realtors say that the market has just freeze, most likely, for a while but did not go down. Let’s see what should affect the strong decline in the real estate market. This is when there is a lot of housing for sale (supply) and no one wants to buy or cannot buy (demand).

Now all new construction is frozen, new projects do not start. So there will be a period when new buildings are finished later, so on the contrary, it reduces the number of housing units on the market (it works to increase prices).
In the spring of this year, there were not enough houses for sale, and in combination with a low interest in mortgage, real estate prices rose very much.
Interest on mortgage for a long period of time in the future should be low. Consequently, this will work to increase prices too.

Unfortunately, there will be problems in the economy, especially with certain areas, and this will lead to a decrease in confidence among the population.
Accordingly, people will be afraid to buy housing during this period. That is, it will lead to prices decrease.

But Canada still remains an attractive country for immigration and immigration has been increased in recent years.

In the late 90s, there were 4 workers per 1 pensioner, in 20 years after today only 2 workers will be accounted for 1 pensioner, if nothing is done. The Canadian pension system works so that those, who work, provide the country’s pension benefits.

Therefore, they increased the immigration quota. All new immigrants, having got a job or having founded their own businesses, will start buying housing, which will also lead to an increase in the cost of housing.

That is, it is definitely hard to say, but I see no reason for the deep crisis in the real estate market. We have already seen fluctuations in the value of real estate, and they are likely to be in the future, but the market will recover itself and will slowly go up. Most likely, there will not be higher percentages of growth, and no one wants this, realizing that this is an abnormal increase, when the cost of properties rises by 10-15-20% per year.

4. How can we help you in 2020?

At the end of 2020, I already wrote how and in what areas our office can be useful to you. I decided to mention this again. Check out the article posted on our website, which was published in Russian newspapers. https://www.totrov.com/en/resources-en/newsletters/newsletter-2020-02-2/
Our office also tries to help you with information as well.

A man phoned recently, and he was completely upset.
He told me “The banks are closed”. No, the banks are working, just some branches have been closed, in others they have reduced hours of operation, but they continue to work.
He asked: “Do they give out mortgages?” – Yes, they do.
“I heard”, he said, “that they do not appraise properties” – appraisals are harder to make, but both banks and appraisers get used to that. Lenders widely use an automatic valuation system now. Everyone is gradually adapting. Someone is transferring his business to the Internet and says that he even is busier. One of our clients told me after our conversation: “Seguei, you disappointed me: I was ready to get a “heart attack”, and you did not let me do it for the second time. She was just very worried, and I calmed her down again. If something bothers you very much, call us and we will talk.

Be healthy!!!

Serguei Totrov
Financial Advisor, CFP, CLU, EPC
Mortgage Broker, AMP
416-222-0533
www.totrov.com

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