What to do when we are unable to pay our mortgage?
by Denis Doucet
- When to warn your lender
- The options available to you
- What your broker can do
Financial difficulties can appear at any moment throughout your life. What happens whem you’ve emptied your backup finances and can no longer reimburse your mortgage?
First, alert your lender… fast!
Being proactive and contacting your lender is the best thing to do. By doing so, you would have the opportunity to discuss a solution that would suit your situation.
Most people shy away from calling their financial institution. They avoid the discussion altogether costing them more serious headaches in the future. Ignoring the overdue notice will most certainly not place you in the honour’s list of your lender! It is best to muster your courage and take matters into your own hands as early as possible. People who experience hardships shelf their issues for too long and this significantly reduces the options available to them to rectify the situation.
According to a study, 61% of Canadian adults* would be clueless on what to do if they were unable to make their mortgage payments. In the 18-34 year old bracket, the number goes up to 74%. These statistics indicate that this matter is relevant. What are your options?
Halt your payments
First, you must consult your lender to verify if this is available to you. If you happen to have a short term liquidity issue then halting your payments would be the quickest method to solve the problem. Some banks will even let you suspend your mortgage payments for a determined period providing justification (inability to work for instance).
Modify your loan or refinance
Another way to better your circumstances is to reduce your monthly payment amounts. By doing so, your mortgage balance will decrease at a slower rate but at least you won’t have any payments in default to your name. Several ways to spread out your payments could be proposed to you and it’s important that you fully understand them before committing.
You could also think about refinancing your property, a Multi-Prêts broker could enlighten you on the advantages of refinancing and simulate different scenarios with you.
Move or rent
On a completely different mindset, you could envision to sell your home to purchase a more affordable property. If this alternative isn’t for you and you wish to keep your current residence, you could rent out a room to a student or perhaps even fully rent your home and temporarily live in an apartment. Obviously, moving involves a lot of changes but it could be the best method to better manage your mortgage loan and ensure a good credit score in the process.
Talk to your broker about it
There are many ways to solve the situation and we cannot list all the possibilities in this article as every case is unique and requires special attention. How can you be objective and make the appropriate decision?
Consult your mortgage broker! He will find the adequate solution to ensure that you can keep both your down payment equity and your residence. His expertise will be a valuable asset to you!
- Several options are available to you in the event of a potential default payment.
- Contacting your lender quickly is vital.
- Your mortgage broker can help you in this situation. Don’t hesitate don’t get in touch with him.