If you can see that in the future, it is going to become harder for your to make your monthly mortgage payments, there are options to consider other than just accept defaulting on your mortgage and causing foreclosure.
- extending amortization – This will reduce your monthly payments. This kind of adjustment can be made at the end of every term when you are up for renewal. Worse case scenario, you can always discuss your situation with your lender and see if they can assist you at an earlier time.
- Shop for Better Terms – While you may get the best interest rate out there, terms of that rate are crucial. Penalties for breaking out of your mortgage or missed payments could be costing you more than the interest itself. This is why it is important to get a broker to do the searching for you and place you in a term/product that will work best indicative to your specific situation.
- Variable may be the way to go – Yes, overall taking a variable rate mortgage is a bigger risk than taking a fixed, in the sense that you never know when it is going to adjust. However, that being said, the potential of the Bank of Canada’s rate increasing in the next year is very low according to economists. Therefore, if it were to increase, it would not be significant in terms of monthly payments overall. It is also in some cases cheaper to break your mortgage with a variable rate as opposed to a fixed depending on the lender. This can lead to cheaper monthly payments and cheaper penalty costs if you needed to break your term early.
- Rent out your property – A lot of home owners who feel they are having a hard time with their mortgage payments decide to rent out to another occupant [either can reside in the basement or roommate situation sharing quarters]. By doing this, you are increasing your cash flow if you are willing to compromise the amount of living space you have. If you have two properties, you can always rent the second one out.
- Consider talking to Creditors – By considering a consumer proposal, this can avoid automatic bankruptcy and foreclosure on your property. Creditors can work with your situation to reduce monthly payments on not just your mortgage but other struggling payments.
Don’t forget to consider these simple solutions before foreclosure, there is always a way! Contact Robert Clancy today for all your mortgage needs!