Late Mortgage Payments

More and more people are coming to us lately claiming that they made late mortgage payments. The reasons will vary from renovations that went over budget to medical emergencies to just plain overspending on credit cards. Whatever the reason, it is important to prioritize your mortgage as this is your home and you do not want to lose it. It’s also important to pay your property taxes and income taxes as they are first in line to receive their money owed, even in front of the bank.

What To Do?

If there is a risk of making late mortgage payments, the first thing to do it communicate with us and/or your mortgage lender. Some lenders will give lenience and hold a payment. The worst thing to do is ignore the problem and let it be a surprise to the bank.

Then What?

If it has gone too far, the lender may call the loan. That means that you have breached the contract and they want their money back. There are 2 main ways that they can get their money back. One way is to talk to someone like us to arrange a new lender that will pay out the old one. That is the best way but it needs to be done early because otherwise, the bank will start legal enforcement. This means the lawyers will start to charge fees that you will need to pay in the end, either from the proceeds of the sale of your home OR from the equity in the home. The second way is for them to force you to sell the home “power of sale”. This is the worst way because everyone will take their cuts and leave you with the crumbs.

Refinancing

If your lender calls the loan due to late mortgage payments, your best option is to refinance and pay them out with a new lender. This is not easy, especially if you have many late mortgage payments. Remember, very few lenders will give you more than 80% of the value of your home when refinancing. So if 80% doesn’t cover penalties, fees and the existing mortgage, you will be in big trouble.

Bottom line: if you’re having trouble making your payments, please talk to us. The sooner the better – even if you are ANTICIPATING missing a payment! You could lose your home!

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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