A Variable Rate Mortgage (VRM) Crisis is here, as according to the Bank of Canada at this moment over 50% or 670,000 fixed payment VRMs issued since 2021 have reached their trigger rate. Driven by additional anticipated rate increases the BoC estimates that number will increase to 65% or 840,000 mortgages by mid 2023.
Borrowers are now receiving notice that their monthly payments no longer cover even the interest portion owed and as such their mortgages are actually increasing (negative amortization).
They are being told to increase monthly payments significantly to put their mortgage back on side.
Many borrowers have not budgeted for these steep increases in monthly mortgage payments and are facing financial distress.
FistStep Financial can help.
This is a significant solution to a massive and immediate pain point experienced by borrowers and their lenders.
FirstStep’s Rate Relief 75 second mortgage provides the funds for homeowners to cover mortgage payment increases on their first mortgages so they don’t have to go into default or secure funds from other sources.
For eligible borrowers, FirstStep deposits to the borrower’s account the payment increase amount demanded by their lender. Advances occur each month on the same payment date as the borrowers 1st mortgage. These auto deposits continue on a monthly basis until the earlier of 24 months, the due date of the first mortgage or when the borrower chooses to re-pay FirstStep.