Debt can be overwhelming, especially when it’s coming from multiple areas in your life. At times it can feel as though you’re crushed under a mountain of debt. One of the biggest forms of debt that Canadians know all too well is mortgage debt. In Canada, it is nearly impossible to buy a house without taking out a mortgage loan. If you are not careful with the house you buy, you can find yourself trapped by mortgage payments that are too expensive for you to afford.
There are many reasons why someone may be struggling to make their mortgage payments and none are because that person is irresponsible, or even bad with money. It could be anything from a change of income to an unexpected financial emergency. Regardless, if you are having a difficult time affording your mortgage, these are a few debt solution options that can improve your situation.
- Mortgage deferrals
When the pandemic started in March 2020, many Canadians saw their incomes diminish or completely disappear. Both renters and homeowners alike struggled to make their monthly payments. Enter the mortgage deferral programs. Lenders offered those who were having a hard time making their mortgage payments a relief period. This allowed people to delay their mortgage payments for a designated period of time.
Mortgage deferrals make a great option for those seeking a temporary solution to their financial hardships. A few months of no mortgage payments can make a world of difference for a person struggling with debt. But what happens after that time period expires?
Those payments need to be made one way or another. It’s important to remember that with any type of loan deferral, your debt doesn’t disappear. There’s a big difference between debt deferral and debt forgiveness. Once that relief period is over, you’ll be expected to start making payments again.
Consider what changes will occur to your monthly mortgage payments if you opt for a mortgage deferral. Will your monthly mortgage payment increase? Will your interest rate increase? How much additional interest will accumulate on those skipped payments? These are all helpful questions to ask before you opt for a mortgage deferral.
- Talk to your lender
If you know you are having issues making your mortgage payments, you should reach out to your lender and discuss what your options are. Your lender may suggest refinancing your mortgage so you can acquire a longer-term loan or see if you can change your interest rate terms. If you can get a lower rate, that’s fantastic. It’s a great way to save money both short and long term. However, if you opt for a longer-term loan, try to consider how much more you might be spending and find out how it will impact your interest rate.
Try to remember that the lender isn’t always your enemy. In many cases, they are willing to make arrangements to accommodate your current financial needs.
The worst thing you can do when you know you’re having a hard time making payments is to avoid your lender. If you are behind on your payments, talk to your lender right away. The longer you wait, the fewer options you will have. Never try to skip payments or ignore warnings from your lender either. Avoiding payments could lead to the bank taking legal action against you. This could result in damaging your financial situation beyond repair or worst case, you could lose your home.
- Income and budget
If your issue is having enough money to pay your debts each month, consider finding another stream of income. Whether this means asking for a raise, for more hours, or getting creative and starting your own side business. There are many ways you can increase your income. Even if it means hosting a garage sale to make some extra cash — every little bit helps.
You may also want to consider your other monthly expenses and where you can cut costs. You’d be amazed by how even the smallest expenses can add up over time. Creating a budget for your usual expenses to find out where you need to cut costs is a helpful and simple strategy to use too.
- Seek professional help & consolidate your debt
If you are completely overwhelmed by your mortgage payments and other debts, it’s best to seek professional help as soon as you can. The longer you wait to confront your debt, the harder it will be to resolve the issue (not to mention how risky it is to accumulate too much debt). There are little-known debt consolidation processes where specialists work for the debtor (not the creditor). There are more options other than losing your home or opting for bankruptcy.
At 4 Pillars, we can easily help you consolidate your debt without having to claim bankruptcy. From mortgage payments to credit card bills to student loans. We can create a plan, customized just for you, to give you the best chance at debt freedom! Stop struggling to make your mortgage payments and give us a call today at one of our three locations. You can reach our Muskoka & Parry Sound office at 705-640-0187, our North Bay office at 705-980-0158, or our Sudbury office at 705-806-1252. Don’t let debt stop you from enjoying your best life — Call 4 Pillars now!