Sometimes unforeseen financial circumstances can impact your ability to make your regular mortgage payments. Or perhaps your debt demons have been caused by taking on too much other high-interest debt.
It can be tempting to want to conceal your debt problem for as long as possible – but that’s almost never the best strategy. With early intervention, there are weapons available that can help you fight these demons!
Your mortgage lender doesn’t want to see you default on your mortgage; they’d much rather help homeowners find a way to keep their home.
For mortgages insured by the Canada Mortgage and Housing Corporation (CMHC), they have identified several tools available to help you ride out a period of financial uncertainty:
1. Converting a variable-interest rate mortgage to a fixed-rate mortgage to protect you in the event of a sudden jump in interest rates.
2. Your lender may be willing to offer a temporary payment deferral, or other flexible options for short-term relief. If you’ve made any lump-sum payments against your mortgage in the past – or if you’ve been on an accelerated payment schedule – that history can help.
3. You may be able to extend your amortization period to reduce your monthly payments. You can shorten the amortization again later if your circumstances change.
4. If you’ve actually missed a few payments already, you may ask if the lender is willing to add them to the mortgage balance and extend the payment period accordingly. (Best, however, to start talking before you start missing payments!)
5. A special payment arrangement unique to your situation may also be possible.
Genworth Canada also has a Homeowner Assistance Program designed to help homeowners who are experiencing temporary financial difficulties that may put their mortgage at risk.
Ultimately though, it’s best to seek help at the first sign of financial trouble. Getting in touch and having a conversation is a great place to begin – because as an independent mortgage professional, I work for my clients and look out for their best interests, not the lenders, and I know what the lenders are after.
It’s possible that your financial situation just requires some extra penny-pinching to stay on budget. But if you find yourself adding to your credit card debt – or borrowing to make mortgage payments – then it’s time have that conversation. The earlier you get help, the easier it will be to conquer those debt demons!
