Struggling with Mortgage Payments? 5 Realistic Solutions for Homeowners Facing Financial Hardship
Life doesn’t always go as planned. Whether it’s job loss, rising debt, unexpected medical expenses, or a sudden economic downturn, financial hardships can happen to anyone. For many Canadian homeowners, the weight of monthly mortgage payments can become overwhelming, especially when paired with other financial burdens like tax arrears or missed credit card payments.
If you’re struggling to keep up with your mortgage, you’re not alone—and there are options available. In this blog, we’ll walk you through five practical solutions that could help you stay in your home, protect your credit, and regain control of your financial future.
1. Mortgage Refinancing
What it is: Mortgage refinancing involves replacing your current mortgage with a new one, ideally with more favorable terms such as a lower interest rate or extended amortization.
Who it’s for: Homeowners who still have decent credit and steady income but need to lower their monthly payments or access home equity.
Benefits:
- Lower monthly payments by extending your amortization period.
- Consolidate high-interest debts like credit cards into one lower-interest mortgage payment.
- Possibly secure a lower interest rate than your existing mortgage.
Important to know: Lenders will assess your credit, income, and property value. If you’re behind on payments or have credit challenges, you may still qualify through alternative lenders or with the help of a mortgage broker.
2. Second Mortgage or Home Equity Loan
What it is: A second mortgage is a loan secured against the equity you’ve built up in your home, typically offered by private or B-lenders.
Who it’s for: Homeowners who are already behind on payments, have tax arrears, or have poor credit but still have equity in their home.
Benefits:
- Access funds quickly to catch up on mortgage arrears, mortgage payments, pay overdue taxes, or cover living expenses after a job loss.
- Does not require breaking your first mortgage.
- Flexible approval criteria compared to traditional banks.
Important to know: Second mortgages carry higher interest rates, but they offer critical breathing room and can prevent foreclosure or power of sale.
3. Mortgage Payment Deferral or Forbearance
What it is: A temporary pause or reduction in your mortgage payments, typically offered by your current lender.
Who it’s for: Homeowners experiencing temporary income disruption due to events like job loss, illness, or natural disaster.
Benefits:
- Provides immediate relief without refinancing.
- Keeps your credit intact if negotiated in advance.
Important to know: Payment deferrals are not forgiveness—missed payments are added to your mortgage balance. You must request this before you miss a payment, and approval is not guaranteed.
4. Sell and Downsize
What it is: Selling your current home and purchasing a smaller, more affordable property or renting.
Who it’s for: Homeowners with substantial equity who can no longer manage their current mortgage or household expenses.
Benefits:
- Eliminate large mortgage payments and reduce living costs.
- Free up capital to pay off other debts or build savings.
Important to know: Timing is critical. Selling early can help you avoid foreclosure and preserve your credit. It also gives you more control over the sale rather than being forced into a quick sale under legal action.
5. Work with a Mortgage Broker Specializing in Tough Situations
What it is: Mortgage brokers work with a range of lenders, including private and B-lenders, who are more flexible than traditional banks.
Who it’s for: Anyone who has been turned away by their bank or doesn’t know what options are available.
Benefits:
- Access to non-traditional lenders that consider equity more than credit score.
- Tailored solutions such as debt consolidation, second mortgages, or short-term private loans.
- No cost to you in many cases, as brokers are often paid by the lender.
Important to know: Be honest about your situation. A good broker can only help if they fully understand your challenges.
What Happens If You Do Nothing?
Ignoring missed mortgage payments or arrears only makes things worse. In Ontario and most of Canada, lenders can initiate Power of Sale proceedings if you fall more than 15 days behind on payments. This process moves quickly and can lead to the forced sale of your home.
Late payments also:
- Severely damage your credit score.
- Reduce your borrowing options.
- Accumulate late fees and legal costs.
The sooner you act, the more options you have.
Final Thoughts: Don’t Wait Until It’s Too Late
Being a homeowner in tough financial times can feel isolating and stressful, but you are not without choices. Whether you leverage your home equity, refinance, or work with a mortgage broker, the most important thing you can do is take action early.
If you’re in Ontario or anywhere in Canada and facing challenges with your mortgage, reach out to a professional who specializes in helping homeowners just like you. The right guidance can help you stay in your home, reduce your monthly payments, and take back control of your finances.
Need help now? Contact the team at LendToday.ca to explore your mortgage options before it’s too late.
