Mortgage arrears resolved after an unexpected medical leave

An example scenario, reviewed by David Jeffrey, Mortgage Broker, FSRA M13001650.

The scenario

Consider a homeowner in Southwestern Ontario with a semi-detached home. After surgery keeps them off work for several months, they miss four mortgage payments while recovering.

By the time a homeowner in this position reaches out, income has often returned, but the challenge becomes catching up on the arrears rather than qualifying on income.

Representative numbers

Property value: About $640,000
Existing first mortgage: About $360,000
Resulting LTV: About 66%
Credit profile: Bruised, low-to-mid 600s
Income type: Returned to work, T4

Why the banks say no

Traditional lenders decline applications like this because of the recent mortgage delinquencies and insufficient time back at work to satisfy standard guidelines.

What we do

In a situation like this, we would arrange a private second mortgage to bring the mortgage current, consolidate high-interest debt, and create a small emergency reserve so the homeowner is not caught out again.

Funded in as few as 10 days from application

The outcome

The mortgage is reinstated and payments resume without further arrears.

The exit strategy

The plan is to refinance into a more traditional mortgage after about a year, once the payment history has been re-established.

"Once income stabilizes, the biggest challenge is usually catching up, not qualifying. That is where a short-term solution can bridge the gap."

By David Jeffrey, Mortgage Broker

Behind on mortgage payments?

If you have fallen behind after a life event, there are options. Talk to us. Your consultation is free and comes with no obligation.

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This is an illustrative example based on the types of mortgage arrears situations we regularly help with. It does not depict a specific client, and the names, location, and figures are representative rather than actual. Individual results vary and are subject to lender approval.