Behind in Mortgage Payments

No one purposely falls behind in mortgage payments.  There is usually some event or situation that puts us behind.  This can be the loss of a job, illness, or a variety of issues.  The first step is to identify the major problem with your cash flow and see if you can figure out a way to increase revenue.  Assuming that you have already reviewed your budget and found anywhere there is to cut unnecessary expenses, this could include taking a second job or taking in a boarder or roommate to help add to the income.

There is also the option to defer mortgage payments for up to six months.  This deferral will include the principal, interest, and property taxes. Because of the impact of COVID-19, many Canadian banks and other lenders have offered this option.  Yes, the interest will continue to accrue, but it will give you some breathing room.  At the end of the deferral period, the accrued interest is incorporated into your mortgage balance.  That means the new mortgage payment will be higher than previously.

Negotiating Alternatives: Why Lenders Prefer Solutions Over Foreclosure

Basically, lenders want their money back, with some profit, of course.  If they find it necessary to foreclose, that involves a lot of time and paperwork. Plus, they then have a house and land that is sitting empty, earning no revenue, and will need to be disposed of.  If you can work out a deal to make some regular payments, it is in the lender’s best interest to take it and help you recover so that you will be back making them money.

There is also the chance that the lender will work with you to modify the current loan.  That includes a change in the interest from floating to fixed.  You may also be able to extend the term, or a number of years, to repay the loan, which will reduce the monthly payments, but you will owe for more time.  The lender has the option to reduce or waive penalties.

Check the details of your mortgage insurance.  Part of its purpose is to protect you against default.

Exploring Relocation and Credit Considerations as Alternatives

Another option is to put your house on the market and relocate to something more affordable or to rent for a period of time until you can recoup.  The missed mortgage payment may affect your credit report, which will, in turn, affect what you can afford going forward, but it is certainly an option.

If you need to consult a professional to sound out your options, try easyhouseloan.ca.  The staff are friendly and non-judgmental.  They will listen to your explanation and probably ask a number of questions to get the best perspective possible.  They will then propose some options.  These are individuals who work with a wide range of lenders on a daily basis. 

Easyhouseloan.ca can help you work with your current mortgage company or possibly offer suggestions about another lender.  Most importantly, they keep track of the trends and attitudes in the financial community.  They will be able to offer practical advice and help guide you to a solution.  If you are in the middle of a difficult situation or anticipate some problems in the near future, contact them soon.

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