What To Do When Your Mortgage Payment Deferral Is Over

A mortgage deferral is an agreement between you (the borrower) and your financial institution (lender) allowing you to delay your mortgage payments for a defined period of time. In response to the coronavirus pandemic, there was a six-month measure offered to Canadians. However, this came to an end on September 30, 2020. Despite this mortgage deferral option, borrowers will still be unable to make mortgage payments these next few months with the vast majority of deferrals coming to an end in October.

So, what can you do if your mortgage payments are starting back up and you are not able to make the payments? Here are some things that you can do.

1. Reach out to your lender, ASAP

Contact your bank mortgage agent as soon as you realize there could be an issue and explain your situation. The bank may be able to accommodate with an extension, but this will be based on a case by case basis. You will have to prove that you need the extension and that you have a plan to keep paying your mortgage in the near future.

2. Seek additional financing

Depending on your situation, borrowing money from a family member or from an existing line of credit to maintain your payments for a few extra months might be your best option. You should also consider applying for a private mortgage. These type mortgages are based on equity in your property and you can receive an approval even if not working.

3. Consider refinancing

Consulting a mortgage agent to discuss refinancing could help to highlight the best solution for you.

4. When to consider selling

In some cases, staying in your home is just not possible. The first step is to take a realistic stock of the situation and come to the decision of what is necessary, not always easy, but must be done. For borrowers who have spoken to a mortgage agent and have exhausted all other options and selling is now the only option, the important thing is to take control of your situation which means to protect your credit for when you will be needing to qualify again for a mortgage, therefore not to allow the situation to get worse where you can fall behind on your mortgage payments -- sell and use the equity to pay off all debts or as much as possible and get a fresh start. That means getting ahead of the bank, and selling before they decide to foreclose.

You have probably heard finance professionals tout the importance of having three to six months of living expenses saved, and they have never been more vindicated than during this pandemic.

Best advice is to call a professional, a mortgage agent/broker to guide you through to make the right decision.