If you’ve missed mortgage payments and need help with mortgage arrears, act quickly. Lenders don’t take missed payments lightly and the costs associated can increase rapidly.
The last thing anyone wants to do is miss payments on their mortgage or fall short of paying off their mortgage. If you find it difficult to keep up with your monthly mortgage payments, seek professional help. Contact your mortgage broker or lender for assistance before your home is in the power of sale.
Clear Up Missed Mortgage Payments & Mortgage Arrears
Although missing a mortgage payment is quite serious you do have options. It’s understandable that things may have changed financially for people after purchasing a property. Moving jobs/employers can have a big impact on your income. If your income changes so do your monthly finances and affordability.
Large debt obligations mean more expenses each month. If you’ve taken on more debt since getting your mortgage this could impact your ability to pay. Take a look at the interest rates on your unsecured debts and compare them to your mortgage. Consider a refinance to consolidate any debts that you have in order to free up cash flow.
Mortgage arrears and foreclosure
Our team can’t stress enough that you want to avoid falling into foreclosure as much as possible. Foreclosure is when a mortgage lender takes legal proceedings against a borrower who stops repaying their home loan. Since the mortgage is collateral against the home, a lender can repossess the property if payments are not being made.
Normally a foreclosure takes a series of missed payments before a mortgage lender will start that process. Most borrowers need to miss 90 days of consecutive mortgage payments before that happens. That may seem like a long time but it quickly ruins any chance of saving your home or getting your lender to keep the mortgage at maturity.
Bear in mind that if you continue to miss mortgage payments with little to no action plan then your lender will be forced to protect themselves and can potentially seek legal action.
Communication with your lender
Mortgage lenders are less likely to work with you if you ignore them. This not only impacts your relationship with them but your chances of a mortgage renewal offer.
Keep in mind that missing payments on your mortgage do come with a bank account and loan NSF fees. If you start to miss more than one payment these fees can add up quickly. The rate of arrears can also affect your credit score.
Step one: contact your bank, credit union, or mortgage lender.
A bank’s objective is to work with you to find solutions to your problem. People are often hesitant to make their mortgage provider aware of any financial issues they are experiencing.
A number of remedies a lender will consider in difficult situations:
- Decreasing the monthly mortgage payments.
- Payment holiday to skip the equivalent of one monthly mortgage payment.
- Refinancing to consolidate debts and improve cash flow.
- Home equity line of credit to consolidate large bills.
- A mortgage deferral for a month or two.
If you broach the subject early on the chances of finding a suitable solution is more likely than not. It’s important to note that these changes may affect the mortgage amortization period.
Step two: be forthcoming with your mortgage lender the next time this happens.
If you are in jeopardy of missing another payment, call your mortgage lender before the scheduled payment date.
Taking the initiative and being proactive will show your lender that you want to work with them. Furthermore, it will show them that you have full intentions of rectifying the situation.
Mortgages are mostly the same but some come with different features. You are better served to go directly to the source who has your information at their fingertips.
Step three: work on a payment plan that suits your income.
A budget is a tool that can help. Take a look at your net take-home income. See how much all your bills add up to including the mortgage payments.
Step four: look at alternative options to clear up any mortgage arrears.
There’s a chance that since obtaining your mortgage the value of your home has seen some appreciation. With the rise in value, you may have access to some of the equity built up.
- A second mortgage can be useful to consolidate debts and any missed payments.
- Home equity loan at a fixed rate of interest.
- Apply for a mortgage refinance to reduce your expense and improve cash flows.
- Use your equity to get a new home equity line of credit.
Remember it is only a short-term issue
You are not the first person to miss payments and the likelihood is this could happen again as we are all prone to human error. As the economy changes so do your household finances. From pandemics to job loss, renters not paying, and reduced income. Traditional Canadian mortgage lenders are here to ensure mortgagors succeed.
Avoid losing high interest and large NSF fees by taking the steps to bring your mortgage up to date.
If you need to clear up missed mortgage payments give us a call at 1-855-242-7732 or apply online now.
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