Afraid of losing your home amid growing expenses? You can start acting right now!
Amid growing cost of living, some homeowners have to eat less or postpone paying bills in attempt to cope with their mortgage payments.
In case this is about you, please know that the sooner you start acting, the better. You may not even know how many options you really have.
It’s important to understand that banks and credit unions don’t actually want to take your property away.
They will not kick you out of your house immediately, because you’re late with payments.
Lenders in some provinces need to wait until you’re at least a month behind in order to start a mortgage sale process. And still, many of them will wait even longer. The whole process can take 6-12 months, says Lawyer Maria Grande, a partner at Thompson Dorfman Sweatman.
Moreover, lenders have to send you several warnings, each one a possibility to find the way out of the situation by developing a plan with them before the house is put on sale. Such a plan is what lenders actually want, Grande noted.
“There are chances to do something if you start early, and they will be gone as soon as mortgage sale proceedings start, which are much more difficult to stop,” – she explains.
If you’re afraid you can’t make your mortgage payments, extending your amortization period or refinancing your mortgage could help you keep the house.
By refinancing a mortgage, you can reduce monthly payments significantly.
First of all, you can increase your mortgage’s amortization period — the number of years you need to pay off your mortgage — with the help of refinancing. You will take more time to pay off and, yes, you’ll pay more interest, but it will reduce your monthly payments.
Besides, most mortgages have different early payment options, allowing you to pay them down faster in case at some point you’ll get extra cash, for instance, a tax refund or inheritance. Such a move will help you offset the disadvantages of a longer amortization period.
Another option is asking to defer your mortgage payments, but lenders view such offers quite unfavourably, so it should be a last resort.
In case you have insured mortgage (with less than 20% down payment and a mortgage default insurance) and you have faced financial difficulties, you can work with your lender and insurer to develop a plan and defer your mortgage payments or receive some other kind of payments relieve.
If you’re having a hard time paying off your debts and covering expenses but don’t know how to solve it, you may consider asking a credit counsellor for help.
They can decrease or even eliminate some of your interest rates, help you pay off your debts and find the best solution for your case.
Please remember – life happens and you are not alone in your difficult financial situation! Banks are not in the business of selling real estate and don’t actually want to take your house away. Talk to your mortgage broker or local branch and don’t wait till the last minute!