9 Painful but Smart Options If You Lose Your Job and Can’t Pay Your Mortgage
Losing a job hits fast. One minute you are on autopilot paying the mortgage, and the next you are staring at a due date that does not care what happened at work.
If you are in that spot right now, here is the most important thing to know: you usually have more options than you think, but the best options show up early. The longer you wait, the more likely fees, missed payment damage, and legal steps start creeping in.
This guide walks through practical, Canadian-friendly steps you can take to protect your home, your credit, and your future flexibility. It is written for real life: you might have severance coming, EI to apply for, a partner with income, or zero savings and a lot of stress.
First, what happens when you miss a mortgage payment?
Most lenders do not jump straight to “take the house.” The process typically escalates in stages:
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A missed payment triggers late notices and possible late fees
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Arrears accumulate (you now owe the missed payment plus the next one if nothing changes)
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Your credit can take a hit once the delinquency is reported
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Collection calls and formal demand letters can follow
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Legal enforcement (power of sale or foreclosure depending on province and mortgage type) becomes more likely the longer arrears go unresolved
The exact timeline varies by lender, province, and whether the mortgage is insured, conventional, bank, credit union, or private. But the shared rule is this: early communication gives you leverage. CMHC also emphasizes contacting your mortgage professional at the first sign of trouble to improve the odds of a workable solution.
Option 1: Call your lender before you miss the payment (yes, even if you hate that idea)
This is the step people avoid most, and it is the step that protects you the most.
When you call, you are not begging. You are opening a “hardship conversation” while your file is still clean enough to qualify for the easier solutions.
What to ask for on the call:
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A temporary payment deferral or reduced payment arrangement
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Interest-only payments for a short period (if your lender offers it)
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Extending amortization to lower the payment (sometimes possible at renewal or through a restructure)
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A skip-a-payment option (some products have features like this, but not everyone qualifies)
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A plan to capitalize arrears (roll missed payments into the balance) if appropriate and permitted
The Financial Consumer Agency of Canada notes that deferrals and amortization extensions can increase interest costs and should be considered carefully.
What to have ready before you call
CMHC recommends clarifying your financial picture and preparing a detailed list of obligations and resources so the lender can assess options realistically.
Have this in front of you:
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Mortgage balance, payment amount, renewal date, and interest rate
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Current cash on hand
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Any severance details
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Expected EI start date (or application status)
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Your bare-minimum monthly budget
Option 2: Apply for Employment Insurance right away (and understand what might be different right now)
If you lost your job through no fault of your own and meet eligibility, EI regular benefits can be a key bridge. Government of Canada guidance notes that eligibility is based on insurable hours and your region’s unemployment rate, and you typically need between 420 and 700 hours in the qualifying period.
Also, there have been temporary EI measures in place during certain economic periods, including a waived waiting period for some new claims in a defined window (check your claim dates).
Practical tip: even if EI will not fully cover the mortgage, lenders often feel more comfortable offering relief when they can see a defined income source and timeline.
Option 3: Use the “triage budget” for 30 days, not the perfect budget for 12 months
When income drops suddenly, your goal is not to build a flawless long-term financial plan. Your goal is to stabilize the next 30 to 60 days so you can keep choices on the table.
A simple triage order many homeowners use:
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Housing (mortgage, property tax, utilities)
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Food and essential transportation
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Insurance (home, car)
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Minimum payments on debts (to avoid snowballing)
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Everything else gets cut or paused temporarily
Then ask: can we create a short-term gap plan that covers the mortgage for 1 to 3 payments?
Possible bridge sources (use cautiously):
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Emergency savings
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Severance and vacation pay
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Temporary reduction in non-essential spending
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Family support (document it if it is a loan)
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Selling non-essential assets
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Short-term side income
Option 4: Ask about a mortgage payment deferral, but treat it like a tool, not a rescue
A mortgage payment deferral can provide immediate breathing room, but it is not free money. Interest typically continues, and the deferred amount is repaid later (often added to the balance or spread into future payments).
A deferral can make sense when:
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Your job loss is likely temporary
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You have a realistic plan to resume payments soon
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You need time for EI or a new job to kick in
A deferral may be risky when:
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The income loss is likely long-term
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The mortgage is already tight and you are deferring without a plan
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You might need to refinance soon and higher debt could hurt the numbers
Option 5: Extend amortization or restructure payments, but understand the catch
Reducing the payment by extending amortization can be effective for cash flow, but it can also increase the total interest you pay over time. FCAC specifically warns that extending amortization to lower payments can add significant interest costs.
Also, not every change is treated the same way by lenders. For federally regulated lenders, OSFI has noted that certain renegotiations, including extending contractual amortization beyond what was previously agreed, can be considered a refinancing and may require the lender to underwrite under Guideline B-20 expectations.
Translation: restructuring can be possible, but you may need to re-qualify depending on what you are asking for.
Option 6: Refinance to lower the payment, consolidate debts, or both (if you still qualify)
If you have equity, refinancing can sometimes lower the monthly obligation by:
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Extending amortization (when permitted)
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Switching to a lower rate (if available and you qualify)
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Consolidating high-interest debt into the mortgage to reduce monthly outflow
This is where timing matters. If you refinance before missed payments pile up, you often have more lender choices. If you wait until you are deep in arrears, options narrow and become more expensive.
A realistic way to think about refinance during job loss:
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If there is another income source in the household, refinancing may still be possible
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If you have strong credit and significant equity, there may be alternative options
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If income is currently zero, a refinance might be difficult right now, but you can still plan a path (temporary relief now, refinance later once income returns)
Option 7: Consider short-term home equity strategies carefully (HELOC, second mortgage, private options)
Some homeowners use equity to buy time. This can work, but it needs a clear exit plan.
Possible approaches:
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HELOC: flexible, but approval depends on lender and qualification
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Second mortgage: can inject cash quickly but usually higher rates
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Private lending: fastest and most flexible, but typically highest cost and fees
The key question is: how do you get out of the short-term solution?
Good exit plans include a signed job offer, returning to work on a known date, selling the home, or refinancing once income stabilizes.
Bad exit plans are vague hope and “we will figure it out later.”
Option 8: If the situation is not recoverable, sell on your terms (before the lender forces the timeline)
This is the hardest option emotionally, but it can be the smartest financially.
Selling early can allow you to:
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Preserve more equity
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Avoid legal fees and forced-sale discounts
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Protect credit compared with a long arrears spiral
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Choose a timeline that works for your family
Even if you love your home, the long-term goal is stability. Sometimes the best move is stepping sideways into a more affordable housing cost while rebuilding income.
If you are thinking “selling feels like failure,” reframe it as protecting future choices. A forced process removes choice.
Option 9: Get expert help quickly (and use the right type of help)
Different problems need different pros:
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Your lender’s hardship team: first call for relief options and internal programs
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A mortgage broker: can shop refinance or alternative lending options and explain trade-offs
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A licensed insolvency trustee: if unsecured debts are crushing the budget and you need formal options
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A real estate professional: if selling becomes the least-bad option
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A non-profit credit counsellor: if budgeting and debt management support would help
CMHC’s guidance is consistent: early intervention and staying informed increases the chances of successfully managing the situation.
A simple “next 72 hours” checklist
If you want a tight action plan, do this:
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Call your lender and ask what hardship options are available
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Apply for EI (or confirm your severance timeline)
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List essential expenses and cut non-essentials for 30 days
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Prioritize the mortgage and property taxes in your triage plan
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Book a mortgage review call to assess refinance or equity options
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If the gap is too large, start exploring a sale plan early rather than late
FAQ
How many mortgage payments can I miss before serious consequences start?
It varies by lender and province, but serious consequences become more likely as arrears accumulate. The safest move is to contact your lender immediately at the first sign you may miss a payment, which CMHC strongly encourages.
Will a mortgage payment deferral hurt my credit?
A deferral is an agreement with your lender, so it is generally different than simply missing payments. But deferrals can increase your total interest cost and may affect future lending decisions depending on your full profile. FCAC notes you should consider the long-term cost impact carefully.
Can I extend my amortization to lower my payment?
Sometimes, yes, depending on the lender and your situation. However, extending amortization can materially increase total interest costs.
Can I refinance if I just lost my job?
It depends on household income, credit, equity, and the lender’s rules. If there is still qualifying income in the household, it may be possible. If income is currently zero, the strategy is often: short-term relief first, then refinance once income stabilizes.
What if I am in Ontario and worried about power of sale?
Ontario commonly uses power of sale processes rather than court foreclosure in many cases, but timelines and triggers depend on your mortgage terms and lender actions. If you are worried, talk to your lender and a mortgage professional immediately so you can act before arrears escalate.
Should I use a HELOC or second mortgage to cover payments?
It can be a workable bridge if you have equity and a clear exit plan (new job start date, refinance later, or sale). Without an exit plan, it can increase long-term risk.
Is there official guidance on what to do when you cannot pay your mortgage?
CMHC and FCAC both emphasize early contact with your lender or mortgage professional and reviewing relief options like deferrals or other arrangements.
Closing thought
Job loss is stressful, but the mortgage problem is usually solvable when you move fast and choose the option that protects flexibility. The goal is not perfection. The goal is avoiding panic decisions by taking control early: talk to the lender, lock in income supports, stabilize the budget, and then decide whether you are bridging a short-term gap or making a longer-term change.
- 9 Painful but Smart Options If You Lose Your Job and Can’t Pay Your Mortgage - January 12, 2026
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