Just like physical health, your financial health is unpredictable. You may be financially stable today, but see yourself struggling with complications the next day.

Financial setbacks have a significant impact on your ability to repay your mortgage. Your affordability decreases, and uncertainties increase.


However, all hope is not lost. You will always find the right mortgage payment solutions if you look hard enough. Work with skilled professionals to navigate any financial setback effectively. For example, if you need a residential mortgage in Toronto, team up with a reputed Toronto broker and work with a suitable lender to get some relief during future financial crises.

If the crisis has already arrived, here are a few ways in which you can manage your residential mortgage effectively:


Analyze The Damage

The first step toward navigating any financial setback should be analyzing it. Acknowledge the damage and look closely at the problem to understand it better.

Knowing your problem helps you find the best possible solution. Ask yourself these questions:

  • How much income have you lost?
  • How long will this crisis last?
  • How are your current monthly expenses impacted? 
  • Which areas can you cut back on?
  • How many mortgage payments can you make while struggling with your crisis?
  • Can you make full monthly mortgage payments?

Analyze your income sources, expenses, bills, and all other instruments impacting your financial stability.


Inform Your Mortgage Lender

Never make the mistake of hiding your financial setbacks from your mortgage lender. Contact them as soon as possible. Most lenders help mortgage borrowers deal with their crises with suitable mortgage payment solutions. 

Here are some of the most common mortgage relief options residential mortgage lenders may have for you:

  • Payment holidays or mortgage deferrals
  • Limited interest-only payment options
  • Temporary reduction in monthly repayments
  • Permanent reduction in monthly repayments by increasing the amortization period

Do not assume that your mortgage lender will foreclose the deal as soon as you share your problems with them. Continuing with your existing mortgage deal is beneficial to you as well as your mortgage lender.


Explore The Mortgage Relief Options

Analyze the mortgage payment solutions you have at your disposal before choosing the best option.

Most residential mortgage borrowers get the following solutions while struggling with financial complications:

  • Mortgage Deferral – Deferrals allow you to pause your mortgage payments briefly. While you will still need to pay the interest, your lender will give you time to compensate.
  • Re-amortization – This is the process of increasing your amortization period, automatically reducing your monthly repayments.
  • Interest-only Payments – Your residential mortgage lender may allow you to pay only the interest on your mortgage for a few months.
  • Mortgage Refinancing – You can refinance by ending your existing mortgage and moving on to a new one with a lower interest rate. You can also consolidate multiple high-interest debts into a single mortgage through refinancing.
  • Government Relief Programs – The Canadian Government runs programs like the Canada Mortgage and Housing Corporation (CMHC), provincial homeowner support initiatives, and more to help residential mortgage borrowers navigate financial setbacks.

Ask your mortgage lender if they offer any of these alternatives. You can also take your mortgage broker’s help in finding the right solution.


Reduce Your Monthly Expenses

Financial setbacks reduce your ability to make monthly repayments. Do your best to reduce your monthly expenses to make whatever repayments you can.

For example, if your financial condition prevents you from paying principal and interest, you can switch to an interest-only payment by cutting your expenses.

Here are a few ways in which you can reduce your expenses:

  • Canceling unused or unnecessary subscriptions
  • Reducing utility usage (water, electricity, etc.)
  • Reducing food expenses by cooking at home
  • Cutting down or stopping luxurious purchases 

Along with reducing your expenses, you can also find ways to boost your income to meet your mortgage commitments. Sell unused household items online, apply for government subsidies, or take on freelance jobs to add to your income while you go through a rough patch.


Prioritize Your Bills

If you are facing multiple bills and you are short on funds, you can prioritize the bills that are extremely necessary.

Here are a few areas you should prioritize while paying your bills:

  • Rent or mortgage
  • Utility bills
  • Medicines and groceries
  • Work transportation
  • Minimum payments on other debts


Seek Professional Financial Advice

If your financial setback has had a serious impact that goes beyond your mortgage payments, you should seek professional help. Approach qualified credit counselors or financial advisors to help you find the best way out. These professionals won’t only help you manage your mortgage payments but also resolve personal financial issues. 


Many credit counselors or financial advisors negotiate with mortgage lenders on their clients’ behalf. You can prepare a revised budget with the help of these experts to manage your income and expenses. They will also advise you on matters like debt consolidation and repayment plans. 


If you do not want to spend a fortune working with these experts, you can approach non-profit counseling agencies like Credit Canada, ACORN, and more. They offer reliable financial advice while keeping you away from scams.


Know Your Consequences

You should know the consequences of missed mortgage payments in the wake of a financial setback. This will help you look for the best possible solution to your problem.

A single missed payment may give you a late fee, and your credit score can take a hit. If you miss two or more payments, your mortgage lender can escalate matters by sending a demand letter. In most cases, if you stay in default for more than 90 days without any resolution, the lender can start foreclosure or sale proceedings. 


The Final Word

Financial setbacks are bound to impact your mortgage payments. However, you can do your best to manage them with the help of your mortgage lender or professional financial advisors. Analyze all options available to you and choose the one that best suits your circumstances.