Mortgage arrears is increasingly becoming a problem for more homeowners these days. No matter how much one’s finances are planned, it is not uncommon to fall behind on payments during months of financial difficulty. Most people do not realize how important it is to make sure that they should prioritize paying their monthly mortgages. It seems it is easy for a lot to forget that failing to pay one’s mortgage on time can result in mortgage arrears and foreclosures depending on the terms in one’s mortgage.
What to Do if You Missed Some Mortgage Payments
The first thing you should do when you realize that you’ve missed some mortgage payments is to contact your lender right away. Ideally, you should do this prior to missing any payment at all. Be sure to be as open and honest as possible with your lender so that your lender can offer a solution or a compromise that can work well with both of you. Make sure that you honour any new payment agreement with your lender and cooperate as best as you can.
Note that failing to pay your mortgage or not following through with a new payment scheme can mean hearing the word “foreclosure” from your lender. Lenders will typically avoid foreclosure because it is a lengthy and headache-inducing process. However, also note that lending companies cannot afford to let people simply not pay their mortgages. To recuperate their losses, they are within their legal rights to foreclose a home with mortgage arrears.
What is Foreclosure?
By definition, foreclosure is a legal action taken by a lender against a mortgage borrower who failed to make payments beyond the terms agreed upon by both parties. Because the home is the collateral for a mortgage loan, the lender is legally allowed to repossess a home and sell it to recover any loses from the money that the is owed.
Foreclosure can happen after a homeowner failed to make several mortgage payments. It doesn’t happen after a single missed payment. Foreclosure happens as a result of mortgage arrears, which means missing payments for a few months in a row and not cooperating with the lender in terms of payment. The process is lengthy and will mean receiving a few demand letters at first, typically at the 30 days, 60 days, and 90 days mark of missing a payment. Mortgage arrears will kick in after 90 days of non-payment. The foreclosure process will then soon follow.
The foreclosure process can vary between provinces in Canada. It is best to take initiative and address any mortgage arrears as soon as possible to avoid foreclosure. Once a property has been in mortgage arrears for more than a certain length of time, the lender can either go through a judicial sale or a power of sale for them to be able to recover their loses.
Save Your Home
The best way to save your home in case of mortgage arrears is to contact the lender or find a way to make payments as soon as possible. We may be able to offer some mortgage arrears solutions for you at Mortgage Central Canada. Contact us and we’ll discuss what we can do for you based on your situation.