For the majority of mortgage borrowers, missing a single mortgage payment is not a concern. But have you ever wondered what would happen if, for some reason, you couldn’t make your payment?
Below I’m going to share with you the process that would follow, and also some options that are available to folks to hopefully avoid ever missing a payment. As I mentioned, most borrowers are very diligent and go to great lengths to make sure their mortgage payments are made each month.
For many, that means using the same account their paycheque goes into or setting up automatic transfers the day before their payment to ensure the funds are always available. Even those who experience difficult times typically do everything possible to make their payments, including using lines of credit or even temporary loans from family members to get them through the tough times.
But for some, hard financial times or a forgotten transfer do result in missed mortgage payments.
When a payment is missed, your lender will generally call or send a letter notifying you of the missed payment and remind you of your contractual obligation to ensure it gets paid.
In the case of a forgotten payment, as long as you can send your payment within 30 days of when it was due, you’ll generally get away with a warning and a late fee from your lender.
If you don’t have the funds to continue your payments or are late by more than 30 days, more serious consequences can follow. This may start with a downgrade to your credit score, followed by collection efforts by the lender. But it doesn’t need to get to this point.
Talk to Your Lender, there are Options Available to You
If you foresee financial issues on the horizon that may prevent you from making your mortgage payments, whether due to a job loss or illness, etc., the best course of action is to contact your lender right away and explain the situation.
Many lenders offer an annual skip-a-payment feature, allowing you to miss one payment annually. For some financial situations, lenders can offer solutions such as interest-only payments, amortization increases or mortgage deferrals.
By reaching out to your lender as soon as possible, you increase the chances of being able to work out a solution that avoids late payments and negative impacts on your credit score, or worse yet, a potential foreclosure.
We’re all human and understand that unexpected events can and do happen. But being proactive about the situation always results in a better outcome vs. avoiding or delaying an inevitable missed 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.