Times are tough for many families in Calgary and the surrounding areas. When faced with job loss or job insecurity, many homeowners wonder what will happen if they can no longer afford their mortgage payments. There is no one size fits all solution for this situation since everyone’s circumstances are unique. The best advice I can give to anyone facing this reality is to contact a trusted financial advisor and mortgage advisor. These professionals have walked this road with countless clients and will be able to help you, too. Here are just a few options you may want to explore with your qualified advisor.
Sell your home
If you have a great deal of equity in your home and it is located in a highly desirable area, selling may be an option for you. Contact a Realtor to find out what your home will sell for and how quickly they estimate it will take to sell. If the market in your area is hot and homes are moving quickly, this may be a good time to sell and downsize.
Ask for a lower mortgage rate
Mortgage rates are historically low right now. If you have not recently refinanced your mortgage, you may be paying a significantly higher interest rate. By reducing the interest rate, you can lower monthly mortgage payments. Be sure to find out if there will be a financial penalty for refinancing before you start the paperwork.
Review your mortgage insurance contract
If you purchased mortgage insurance, find out if it covers financial hardship caused by job loss. Some insurance plans offer this but it must have been purchased prior to your job loss. Coverage cannot be applied retroactively.
Talk to your bank
Many banks offer assistance for people who are struggling with their mortgage payments due to a change in their life circumstances. Some will allow you to skip a mortgage payment or take a temporary leave from your mortgage payments. It is best to visit your bank to review your options before your mortgage falls into arrears.
If you have additional assets that can be liquidated, do that. This could include things such as vehicles, vacation properties, or recreational vehicles like a boat, ATV, or motorcycle.
As I mentioned earlier, the best piece of advice I can offer to anyone faced with not being able to make their mortgage payments is to get professional advice as soon as possible. Failing to address the situation in a timely manner can make it more complicated and significantly prolong resolution.