Most mortgage borrowers in Canada don't miss mortgage payments. Even if times get rough, most will either use their line of credit or even borrow money from family or friends to make it through the tough times.
If you are late on your mortgage payment, but still make the payment in full within 30 days of the due date, then you shouldn't be in too much trouble. Probably just a late fee from your Lender.
If you are late by more than 30 days, there can be serious damage done to your credit and possibly collection efforts taken by the Lender.
It doesn't have to get to that...even if money is tight for a period of time.
If you feel like you can't make your mortgage payment, contact your mortgage Lender as soon as possible to discuss your options. Many Lenders offer skip-a-payment programs where you can, you guessed it, skip a payment once per year. Some Lenders will also offer an interest only payment options or a deferred payment option...just like we saw when the COVID pandemic first started.
We're only human and stuff happens sometimes. As long as you approach your Lender as soon as possible, if you run into trouble, then you should be able to work with them to minimize any damage that would be caused by missing a mortgage payment.
Should you find yourself in a similar situation and need advice on how to proceed, please don’t hesitate to reach out. I’ll be more than happy to assist in finding a solution.
For most people, purchasing a property is the largest financial investment they'll make.
Managing the expenses that go along with home ownership can cause many people a lot of stress and anxiety...especially the mortgage payment itself.
Here are a couple ideas to help you minimize stress while managing your mortgage payments.
Time Your Mortgage Payments To Match Your Payroll
If your chequing account is like mine, it's like a revolving door of money going in and then coming out just as quickly. Monitoring the account regularly to make sure there's enough money in the account to cover the mortgage payment can cause stress for a lot of people.
By setting your mortgage payments to come out of the same account that your payroll is deposited into, and on the same day as you get paid, you don't have to worry about the account balance and therefore your stress can be reduced.
If you can't have the mortgage payments come out of your payroll account, then set up an automated money transfer so that the necessary funds are automatically transferred for you.
Lower Your Mortgage Payment
If the balance owing on your mortgage is less than 80% of your property's current market value, then you may qualify to refinance your mortgage.
Refinancing, under the current mortgage rules, will allow you to stretch your amortization period out to 30 years which will lower your mortgage payment and provide some stress relief.
Refinancing doesn't always make sense so be sure to speak with your Mortgage Broker/Specialist (me) about your options.
You can learn more about refinancing here.
Pay Off Your Mortgage Faster
If you're the type of person that just isn't comfortable with debt of any kind, paying off your mortgage sooner can obviously relieve a lot of stress...if you have the means to do so, of course.
There are many ways to pay off your mortgage a little sooner. Each Mortgage Lender has different rules around this but here are a few of the most common ways to do so:
-You can choose Accelerated Weekly or Bi-Weekly payments. This will increase your regular weekly or biweekly payment slightly but will pay off your mortgage faster and you probably won't even feel the slight increase in payment on your budget.
-You can pay extra on your mortgage using lump sum payments. If you get a nice income tax return or get a bonus at work, you can put that money right onto your mortgage.
-You can double up your payments. This is similar to making a lump sum payment but you are literally just making the equivalent of 2 payments at once. Part of your regular payment goes towards paying down the principal balance of your mortgage and the other part goes to interest...but the second (double up) payment goes completely against the principal balance.
Having your mortgage paid off is most people's dream but many people think that you need to be rich or come into a large sum of money to get there early. But, if you use some of the methods I've listed above, you can pay off your mortgage sooner without really feeling a pinch on your budget.
These are just a few tips on how to address the mortgage stress you might be feeling.
If you are feeling stressed about your mortgage, I'm always available to chat and we can see what options we can figure out.
Contact me anytime!