By Leanne Mollica
Mortgage Broker | Mortgage Architects – Team Borle
Founder, My Mortgage Strategy
Serving Salmon Arm, the Shuswap, and British Columbia
Nobody ever expects to have trouble making their mortgage payment.
It usually doesn’t happen overnight.
Inflation stretches the household budget a little further. Hours at work get reduced. An unexpected expense lands at exactly the wrong time. There may be a job loss, illness, separation or another major change in circumstances.
Most people do what comes naturally.
They tighten the budget. They juggle bills. They use savings. Maybe the credit card starts carrying a balance that normally wouldn’t.
And they tread water for as long as they possibly can.
The problem is that by the time you feel like you’re drowning financially, some of the options that may have been available to you earlier can become much more limited.
You Don’t Have to Miss a Mortgage Payment Before Asking for Help
This is probably the most important thing I want homeowners to understand.
You do not need to wait until you’ve missed a mortgage payment to start the conversation.
In fact, if you can see that you’re heading toward a point where making your regular payment may become difficult, that’s exactly when you should start asking questions.
Depending on your lender, your mortgage and your circumstances, there may be options available to create some temporary breathing room.
Those options will not be the same for everyone, and they are never guaranteed. But your lender may be able to discuss things such as a temporary payment deferral, extending your amortization, changing your payment arrangements or another form of mortgage relief or restructuring.
The important part is finding out what is available before the situation becomes urgent.
Why Waiting Can Make Things Harder
When money gets tight, the mortgage often isn’t the first payment someone misses.
People understandably want to protect their home, so they may start relying on other forms of credit instead.
A credit card gets used for groceries.
The line of credit covers an unexpected bill.
Balances increase and available credit decreases.
Eventually, it can become difficult to keep everything current.
This matters because if restructuring your mortgage or refinancing eventually becomes part of the solution, your credit, income and overall debt picture may all affect the options available to you.
A solution that might have been available several months earlier may become more difficult — or more expensive — after missed payments or significant changes to your credit.
That’s why I would much rather have someone call me too early than too late.
Mortgage Payment Relief Isn’t One-Size-Fits-All
There isn’t one universal solution for homeowners experiencing financial difficulty.
The right approach depends on why you’re struggling, whether the situation is temporary or longer-term, what type of mortgage you have, your lender’s policies and your overall financial circumstances.
For one homeowner, a temporary arrangement with their existing lender might provide enough breathing room.
For someone else, extending the amortization may reduce the monthly payment, although it can also mean paying more interest over time.
In another situation, restructuring or refinancing the mortgage might be worth considering.
And sometimes the best solution has very little to do with changing the mortgage at all.
The goal isn’t to find a mortgage solution at any cost. It’s to understand the options available and determine which one actually makes sense.
Be Careful About Simply Moving the Problem
If you’re carrying higher-interest debt alongside your mortgage, accessing home equity to consolidate that debt can sometimes improve monthly cash flow considerably.
But that doesn’t automatically make it the right answer.
Moving credit card or line-of-credit debt into a mortgage can turn short-term debt into debt repaid over many years. There may also be mortgage penalties, appraisal costs, legal costs or other expenses associated with restructuring.
That’s why the conversation needs to be about more than:
“How much can I lower my payment?”
We also need to ask:
“What will this cost me, what does my financial picture look like afterward, and does this actually solve the problem?”
Sometimes the answer will be yes.
Sometimes it won’t.
Your Existing Lender May Be the Best Place to Start
If you’re worried about making an upcoming mortgage payment, contacting your existing lender early is important.
Explain what’s happening and ask specifically what options they have available for borrowers experiencing temporary financial difficulty.
And don’t be afraid to ask questions.
If a payment is deferred, what happens to that payment?
Does interest continue to accrue?
Will the deferred amount be added to the mortgage balance?
Will your payments change afterward?
Does the arrangement affect your credit reporting?
What happens when the temporary relief period ends?
Getting some breathing room today is helpful, but you also need to understand what that relief means tomorrow.
You Can Call Me Even If I Didn’t Arrange Your Mortgage
This is another thing I want homeowners to know.
You don’t have to be an existing client of mine to call me.
Maybe another mortgage broker arranged your mortgage years ago.
Maybe you walked directly into your bank.
Maybe you’ve never worked with a mortgage broker in your life.
That’s okay.
Depending on your lender and circumstances, you may be able to authorize me to communicate with your lender and help you navigate the options available.
And if I can’t deal directly with your lender on your behalf, I can still help you understand your mortgage, talk through the possibilities and figure out what questions you should be asking.
Sometimes knowing where to start is half the battle.
Call When You’re Starting to Tread Water — Not When You’re Already Sinking
Nobody plans to struggle financially.
And asking questions about your mortgage doesn’t commit you to refinancing it, breaking it or changing anything at all.
Sometimes a conversation ends with a plan.
Sometimes it ends with a few phone numbers and questions to ask your lender.
And sometimes it ends with me telling you that the best thing to do right now is absolutely nothing.
But the earlier we have that conversation, the more opportunity we have to look at the situation calmly rather than trying to solve it during a crisis.
So if you’re starting to feel like you’re treading water financially, please reach out.
You don’t have to wait until you’ve missed a payment. In fact, it’s much better if you don’t.
With mortgage arrears in Canada having risen from the exceptionally low levels seen a few years ago, it’s another reminder that financial circumstances can change for perfectly ordinary households.
Asking for help early isn’t a sign of failure.
It’s planning ahead.
And sometimes a 10-minute conversation today can prevent a much bigger problem tomorrow.