Can’t Make a Mortgage Payment? Don’t Panic!

It’s no secret the economy is taking a toll on Albertans, even today two more major companies announced huge layoffs in Calgary alone. It’s not an ideal situation for many people right now, but it’s important to keep your head on straight about your finances and the debts you’re carrying, like a mortgage.

A survey conducted within the last 12 months by LAWPRO®, showed 61% of Canadians don’t know what options are available to them if they are unable to make their mortgage payments. For younger Canadians, 18 to 34-years old, this number is even higher at 74%. Even more alarming, 79% of those surveyed currently own a property or have considered purchasing one. This paints a pretty grim picture of the lack of mortgage literacy, but the good news is if you’re one of the majority — you’re not alone!

“I know when I was in practice, and I was in practice 25 years, when the clients came to see me we were months down that road,” says Mr. Leclair. “There were a number of issues to be dealt with at that point.” Clients would usually show up at his door “when their back is against the wall” and a power of sale has already been started by the financial institution. If you are in arrears — generally described as having missed three monthly payments — the bank can initiate a power of sale against you and put your property on the market. If your home sells for less than your loan, you’re still on the hook for any debt outstanding plus legal fees for 20 years. “Banks get upset when you ignore them,” said Mr. Leclair, noting financial institutions are less likely to renegotiate your payment terms at this point. [Financial Post]

Financial difficulty, whether short-term or long-term, can happen to anyone at any time. Your home is one of the biggest financial investments you’ll make, so while life happens and things can come up, you want to ensure you protect your investment. If you’re behind on mortgage payments and living in fear or losing your home, it’s best to face the situation head on and take corrective measures early. Here are some steps to help you ease the stress and get back on balanced financial ground:

• Contact your mortgage lender right away: being honest with your lender in the early phases will help you avoid penalties, get you on a payment plan and on your way to the best solution.
• Contact your mortgage broker: they can provide you with the right advice, especially because they’ve helped others in similar situations
• Develop a budget, and be honest with yourself about it. Once you’ve defined a budget, stick to it.
• Consult a professional: If you feel like you can’t manage your finances on your own, consult a debt management or credit counseling company.
• Be ready to change! Nothing you do will make any difference unless you get real with yourself about the situation you’re in, and commit to change.

If you are feeling stressed out about your ability to make your mortgage payments, please reach out to me!

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