The COVID-19 pandemic has been going on for weeks and our economy has been taking the hit for the same span of time, but is there more that can be done to help people deal with job losses, decreased business revenue, and less billable hours at work? Experts fear that even if lockdowns and quarantine are to end soon, the near standstill of a few weeks will have long-term consequences for everybody’s cash flow. Businesses may continue to see decreased income for the rest of the year, how then will people cope with a reduction of income?
Time for a Change?
Some financial insiders are calling for easier ways for people to get home equity loans and refinance mortgages. Traditionally speaking, banks and other major financial institutions are very strict with their terms and often will not approve applications of people who are currently unemployed. Some banks also have limits on the maximum number of applications they can approve in a month and have specific standards when it comes to credit scores. Given that the COVID-19 pandemic caused a lot of people to lose their jobs and live off of their credit cards, a significant number of people in need not only have lost their sources of income, but now also suffer from less than attractive credit score. These people need a break now more than ever, so what is the solution? Perhaps banks could relax some of their requirements and opt to approve more mortgage refinancing and home equity loan applications for a limited period?
Will This Help?
It is no secret that lending requirements in Canada has been made stricter recently. This was to put in more checks in balances for the economy. However, with the COVID-19 pandemic, the current situation is entirely different and need special considerations.
The effects of recent mortgage restrictions have been truly felt by some in the past year, and no doubt felt by more who are affected by job losses and decreased income related to the pandemic. If big financial institutions will be allowed to be a little bit less strict these days, this will allow more people access to financial help that they need to get back on their feet. If the government can find a way to relax regulations, lenders can be exempted from some regulatory liabilities and have more freedom. Then perhaps a new category of home equity loans specific for COVID-19 response can be created for qualifying homeowners.
Is There Time Left?
The fact is that the economy will still face a slowing down whether the pandemic stops tomorrow, next month, or next year. The best time to think of financial solutions to prevent further damage to jobs and businesses is now. If home equity loans are easier to avail of and if there are simpler ways to qualify for a mortgage refinance, it will be easier for a lot of people to financially recover and help jumpstart the normalization of flow of resources once pandemic restrictions are lifted and people can go back to work again.
Are you a homeowner looking for a way to tap your home equity but have been turned down by banks for a mortgage refinance or a home equity loan? Contact us and let us tell you of the ways private mortgage lenders can help you at Homebase Mortgages.