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How to Handle Late Mortgage Payments

Purchasing a home is a significant achievement for many Canadians, but financial setbacks can sometimes make it challenging to keep up with mortgage payments. Late mortgage payments can lead to stress and anxiety, but the good news is that there are several options and solutions available in Canada to help homeowners navigate through this difficult situation and avoid potential foreclosure.

In this article, we will explore various strategies and resources to assist you in handling late mortgage payments effectively.

1. Communicate with Your Lender

The first and most crucial step when facing late payments is to communicate openly and honestly with your lender. As soon as you anticipate difficulties in meeting your mortgage payment, reach out to your mortgage provider. Many lenders in Canada understand that financial hardships can happen, and they may be willing to work with you to find a solution.

2. Options Offered by Lenders

a. Forbearance Agreement: A forbearance agreement is a temporary solution offered by lenders where they agree to reduce or suspend your mortgage payments for a specific period. During this time, your credit score won’t be negatively impacted. Once the forbearance period ends, you’ll need to resume regular payments, and the missed payments will be added to the end of your mortgage term.

b. Repayment Plan: Some lenders may allow you to create a repayment plan to catch up on missed payments. In this arrangement, you’ll make slightly higher payments over an agreed-upon period until you’re up to date. It’s essential to discuss the terms and ensure they’re manageable for your financial situation.

c. Loan Modification: In certain cases, lenders may modify the terms of your mortgage to make it more affordable. This could include reducing the interest rate, extending the loan term, or changing from an adjustable-rate mortgage to a fixed-rate mortgage.

3. Government Assistance Programs

The Canadian government offers assistance programs to help homeowners facing financial hardships. These programs can provide temporary relief and support during challenging times.

a. Canada’s COVID-19 Mortgage Payment Deferral: Introduced during the pandemic, the COVID-19 Mortgage Payment Deferral program allowed eligible homeowners to defer mortgage payments for up to six months. If you’re still experiencing financial difficulties, some lenders may extend this deferral further.

b. Home Buyer’s Plan (HBP): Under the Home Buyer’s Plan, you may be able to withdraw up to $35,000 from your Registered Retirement Savings Plan (RRSP) to use towards your mortgage payment. This option is available for first-time homebuyers or those who haven’t owned a home in the past four years.

4. Refinancing Your Mortgage

Refinancing your mortgage can be a viable solution to handle late payments, especially if you have built up equity in your home. By refinancing, you can renegotiate the terms of your mortgage, potentially securing a lower interest rate or extending the loan term, which can result in lower monthly payments.

5. Seek Professional Advice

Navigating through late mortgage payments can be complex, and seeking professional advice is essential. Consider speaking with a financial advisor, mortgage broker, or a housing counselor approved by the Canadian Mortgage and Housing Corporation (CMHC). They can provide valuable insights and guidance tailored to your specific situation.

6. Consider Renting Out a Room

If you’re comfortable with having a roommate or extra space in your home, consider renting out a room to generate additional income. Renting out a spare room can help cover a portion of your mortgage payment and alleviate some financial pressure. However, be sure to check local regulations and create a clear rental agreement to protect both parties’ rights and responsibilities.

7. Look into Mortgage Assistance Programs

Certain provinces in Canada offer mortgage assistance programs for homeowners facing financial hardship. These programs vary by region and may include interest-free loans, grants, or deferred payment options. Research the available programs in your area and check if you meet the eligibility criteria to receive assistance.

8. Prioritize Your Expenses

When facing financial challenges, it’s essential to prioritize your expenses. Ensure that your basic needs, such as food, utilities, and essential bills, are covered first. By carefully budgeting and cutting back on non-essential expenses, you may free up funds to put towards your mortgage payment.

9. Seek Employment or Income Boosting Opportunities

If job loss or reduced income is the reason for your late mortgage payments, actively seek new employment opportunities or consider income-boosting endeavors. Part-time work, freelancing, or starting a small business on the side can provide additional income to help you catch up on missed payments.

10. Explore Debt Consolidation

If you have multiple debts with high-interest rates, consider consolidating them into a single loan with a lower interest rate. Debt consolidation can simplify your financial obligations and reduce the overall interest you pay, making it easier to manage your finances and mortgage payments.


Facing late mortgage payments can be overwhelming, but remember that there are various options and solutions available to help you through this challenging time. Communicating with your lender and exploring government assistance programs or refinancing options can be instrumental in resolving the issue.

Seek professional advice to make informed decisions and take control of your financial situation. With careful planning and proactive steps, you can overcome late mortgage payments and continue to build a stable future for yourself and your family.

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