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Struggling with your mortgage payments? Here is what to do
Are you struggling to pay your mortgage payments in Canada due to Covid-19? Take heart, you are not alone.
According to Government of Canada publications, roughly 760,000 Canadians have applied for some sort of mortgage deferral from a chartered bank due to the recent pandemic. Leger poll suggests a hefty 21 percent of the Canadians are unable to pay their mortgage payments due to Covid-19. This also includes difficulty in making rent payments.
Add to this, three-quarters of a million Canadian homeowners have either skipped or deferred mortgage payments since the pandemic began.
But keep your worries calm as there are things you can do to get help with mortgage payments. To know your options, keep reading as you are about to learn about 5 helpful things that you can do right now to avoid losing possession of your home.
Can’t Pay Mortgage? Here Are Your Options
1. Seek Government Help Programs
In the wake of Covid-19, the Canadian Government took immediate and significant actions to support Canadian individuals and businesses facing financial problems. For instance, if you are facing hardships in paying your mortgage, you are eligible for a mortgage payment deferral.
The deferral is an agreement between you and your lender to pause or suspend your mortgage payments for a certain amount of time. After the agreement ends, your mortgage payments return to normal and deferred payments are resumed. But remember once your payments resume, you will have to repay the amounts of the skipped payments including the interest.
To know whether you are eligible for mortgage deferral or not, contact your lender or your mortgage professional for available options.
2. Check Your Eligibility in Canada’s COVID-19 Economic Response Plan
If you are struggling to pay your mortgage, you can still request relief. Contact your mortgage service provider to ask for help. But before asking for help, here are four things you must know.
- You can request Mortgage Deferrals which will allow you to temporarily reduce or pause your payments. However, this relief is not automatic. You have to contact your mortgage service provider to find out what options are available for you.
- You can apply for personal loans that are backed by the Federal government. If you are struggling to pay back the mortgage due to Covid-19, you can get a mortgage deferral for up to 180 days.
- When contacting your mortgage service provider, ask how and when you will need to repay the missed payments.
- If you are eligible for mortgage deferrals, you are not required to show proof of financial hardship. Just tell your service provider that you are facing hardship due to the pandemic.
3. Generating More Income
The reason you are not able to pay the mortgage is that your income is reduced either because you have lost your job or your working hours are reduced due to the Coronavirus outbreak. But there are still ways by which you can increase your income by increasing the working hours.
One of the most feasible options to increase your income is to rent out a portion of your house. You may not get your full-time income with it, but it will surely be a considerable addition. Finding tenants should not be difficult. Many people are still unable to enter the housing market.
If you still lack the required amount to pay your mortgage, you can consider Uber driving in your extra hours. Since the pandemic has reduced social activities and fewer and fewer people prefer public transport, Uber can be the best option to pick at this time. The process of joining Uber is not long and you can easily join it after some simple steps of verification.
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4. Reach Out To Your Mortgage Broker For Prepayment Options
You might have made prepayments in the early stages of your mortgage term. If you did, then take a sigh of relief as you can ask your financial institution to re-borrow the amounts you paid earlier. This amount, as result, can help you make your mortgage payments.
If you did not prepay anything then you can always look for alternatives. One of the best alternatives for this is the balloon mortgage.
A balloon mortgage is a loan that has very low or no monthly payments, but in the end, you have to pay a large lump sum amount. Due to the large amount to be paid at the end, it is named a balloon mortgage. Since balloon mortgages are for the short term (5, 7, or 10 years) the interest rate is relatively low.
So, if you want to refinance your mortgage before the final payment comes due, a balloon mortgage is for you.
5. Consider Selling Your House
If you have fallen behind payments and could not see any way to get out of it, selling your house can be one option. But make sure you consider it as your last option – when you cannot see anything else.
If the worth of your home is more than what you owe, then selling it may prove to be a more wise decision for you in the longer term. You can always down-size and move to a house that is smaller but fits your needs quickly. This way you will get enough money to repay your mortgage payments.
However, make sure you take it as your last option as the selling and buying process might take a big chunk of your money in fees.
If you are struggling to keep up your mortgage payments or paying less than you owe, you have to work out a way to pay back quickly. If you do not, your lender can take you to the court and you may end up losing your house.
The above five options discuss exactly how you can avoid losing possession of your house by deferring the mortgage payments. No matter what option you pick, make sure you make your decision early. Not taking any decision and waiting might end you up in more serious problems.
Act now, make sure to get in touch with us. We will offer you complete guidance and devise a plan according to your needs.