Mortgage payment: How to put things in order before renewal day

As the mortgages of millions of Canadians are set to renew over the next few years, experts say now is the time to make sure you’re in good standing with your lender.

Some 80 per cent of mortgages taken out in 2022 will be up for renewal this year, according to the Bank of Canada, and nearly all of those mortgages will renew by 2026.

While lenders are eager to keep mortgage holders as clients, Ian Calvert, vice president & principal at HighView Financial Group, and Christopher Molder, principal broker at Tridac Mortgage, say falling behind on payments could cause problems when it’s time to renew.

The worst thing you can do is miss a payment and then disappear, says Molder, emphasizing that communicating with your lender is important.

Working with your lender to get back on track can include providing them with a timeline of payments you plan to make.

 

 

‘Lender will be forced to take legal action’

Things get trickier if you’ve missed multiple payments.

“If it’s somebody who missed one month, then another month, and then a third month, then your lender will be forced to take legal action,” says Molder. This can include beginning legal proceedings to sell the house under power of sale.

Molder explains that you still have the ability to bring your mortgage back into good standing if legal proceedings have begun.

According to Molder and Calvert, some solutions are to enlist the help of family and friends, extend your amortization or, as a last resort, take out a private mortgage.

 

A private mortgage is a temporary solution — typically for up to two years — until your finances improve. Molder warns that a private mortgage comes with its own set of risks and that you should have an exit plan in place as it’s not a permanent solution.

The bottom line, according to Molder, is if your payments are all up to date, “then renewing the mortgage shouldn’t be a stressful or difficult thing to do.”

Calvert agrees, adding that “financial institutions would cancel the renewal and walk away only under specific circumstances.”

 

This article was reported by The Star