What to do when you cannot pay your mortgage

Red Deer mortgage professional gives key advice on what to do in that stressful time

So the reality is that life happens and we can become unable to meet our obligations. This week and next we are going to take a closer look at this situation to develop strategies to get you through as painlessly as possible. This week will we will start with those who have mortgage default insurance.

There are three mortgage default insurance providers in Canada; CMHC, Genworth and Canada Guaranty. If you put less than 20% down on your mortgage you will have paid one of these three to insure your loan in case of default. The mortgage lender is the beneficiary of this insurance as they have an assurance that in the case you default, they will not incur any losses.

If you find yourself unable to make the mortgage payment the first step is to get into contact with your mortgage provider. Write down what has happened, be able and willing to provide a list of assets and liabilities, and explain what steps you have taken on your end to meet the obligation. Tell them of the expected timeline to catch up. For example, you have lost your job but start another in two weeks. Be proactive and do not ignore their phone calls.

If you are unable to come to terms with the mortgage provider you can opt to contact the insurer to intervene on your behalf. Each of the three has a direct line for consumers. There are many options they have available for you. Their goal is to avoid the expensive foreclosure process. No one want to see you lose your home, that I can promise.

Here is a list of the ways they can help in the short term.

1. Your variable rate mortgage can be converted into a fixed rate to re-establish the amortization schedule

2. If you have prepaid the mortgage you may be able to reborrow those funds.

3. Deferring mortgage payments up to four months.

If your troubles are of a more long-term type:

1. Extended mortgage payment deferral if you need more than four months.

2. Extension of amortization period to a maximum of 40 years to decrease the payments.

3. Special payments arrangements as long as they are reasonable may be negotiated.

4. The bank has the ability to approve a capitalization of up to $20,000 to cover past due principal, property taxes, interest, condo fees, utilities and property repair.

If your situation is more complex:

1. Combination of any of the above.

2. Interest only period which brings the payments within affordability

If all the above will not mitigate the circumstances and foreclosure is unavoidable:

1. Sale by borrower – You agree to stay in the home and maintain it to get the best price. The home is sold and the bank repaid. You will be expected to continue with some payments during this time.

Involve the bank and the default insurer as soon as you can. Early and well-planned analysis of the situation, with financial assistance, can in the majority of cases remedy the default problems. This is also the best way to preserve your credit and future borrowing ability. Life can happen, we will get through it together. Call your mortgage professional today for more info.

Pam Pikkert is a mortgage broker with Dominion Lending Centres – Regional Mortgage Group in Red Deer.

Just Posted

WATCH: Ronald McDonald House Central Alberta hosts Barnyard Breakfast

FortisAlberta makes $10,000 donation to House operations

Innisfail RCMP charge woman in connection with seizure of eight dogs

Karin Adams, 46, of no fixed address faces dozen charges

WATCH: Red Deer’s Westerner Days kicks off to a smoking hot start

Thousands take in the food, entertainment, rides and more at Westerner Park

WATCH: 2018 Westerner Days Parade brings 1000s to downtown Red Deer

The parade begins five days of western fun and culture in Central Alberta

Innisfail RCMP seize eight dogs from hotel room following earlier arrest

Dogs were in distress and taken to an animal rescue organization

WATCH: Tune into What’s Up Wednesday

An overview of the week’s news in Red Deer

World’s translators push back on forcing Trump interpreter to testify

Democrats had asked translator to testify about Trump’s lengthy conversation with Putin in Helsinki

Canadian government threatens to retaliate if Trump imposes auto tariffs

U.S president had suggested that auto imports pose a national security risk to the U.S.

UPDATED: Airdrie man charged after Taser-like weapons seized

Canadian Border and Airdrie RCMP charged a man after an attempt to bring the weapons into Canada

Ontario, Saskatchewan premiers join together to oppose federal carbon plan

Saskatchewan is already involved in a court case over the tax

Sylvan Lake is moving toward a greener town

The Town of Sylvan Lake is moving forward with a contract with Fogdog Energy

Wetaskiwin RCMP investigate theft of almost $140,000 value in Millet

Wetaskiwin RCMP respond to past break and enter at a rural Wetaskiwin property

After cave rescue, soccer boys pray for protection at Thai temple

On Wednesday evening, the boys and coach were released from hospital

Gymnastics sex abuse victims join hands, accept courage award at ESPYs

The women who spoke out against the abuse by Larry Nassar stood together Wednesday night

Most Read