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

City sells former RCMP building, land to province

Construction of new courthouse in Red Deer one step closer to reality

City increases parking rates by 25%

Red Deerians expected to pay increase in early fine payments

RCMP make arrests after bank robbery

Two suspects are in custody after using a needle to rob a CIBC in north Red Deer

WATCH: Lowe’s officially opens its doors in Red Deer

New retailer has created 128 permanent jobs

WATCH: Lacombe and Red Deer Chambers prepare members for cannabis legalization

Luncheon speaker educates businesses on marijuana policies

Suspected Toronto serial killer targeting gay community arrested

A 66-year-old man is charged with first-degree murder in disappearance of two Toronto men

Barenaked Ladies, Steven Page, to be inducted into Canadian Music Hall of Fame

Canadian band to get top honours at 2018 JUNO Awards

B.C. out of the running for Amazon’s next headquarters

Toronto is the only Canadian city left in the running despite the province backing Metro Vancouver’s bid for new Amazon headquarters

Post interest rate hike debt tips

What to do about your debt and mortgages after the interest rate hike

Foreign workers sleeping in Alberta Burger King basement

Alberta Health Services said its inspectors found foreign workers sleeping in the basement of the Lethbridge restaurant

Court application halts release of bread price-fixing documents

Bread price-fixing documents won’t be unsealed Thursday, Loblaw says

Pharrell and N.E.R.D to headline NBA All-Star halftime show

11-time Grammy winner Pharrell and his hip hop-rock band N.E.R.D. will headline the halftime show at the 2018 NBA All-Star game in Los Angeles

Heritage Minister wants zero tolerance for harassment in entertainment industry

Heritage Minister Melanie Joly had two meetings to discuss harassment in the film, TV and theatre worlds

Most Read