(NC) The high cost of living is having an impact on a lot of people’s finances. If you’re struggling to pay your mortgage, know that you’re not alone and that there are ways to help reduce some of the stress.
It’s important that you talk to your bank as soon as possible if you’re having a hard time making your mortgage payments so you can discuss your options together.
Renegotiating your mortgage
You may be able to renegotiate your mortgage agreement. You could, for example, convert your variable interest rate to a fixed interest rate. This option could help lower your payments if interest rates are too high. Also, knowing what your payments are every month could help reduce some stress and help you better manage your money.
Skipping a payment
Your bank could offer you a “skip a payment” option. Certain banks also call this option “payment pause,” “miss a payment,” and “take a break.” Your bank allows you to miss a maximum number of mortgage payments each year. If you have made any prepayments toward your mortgage, your bank could apply these amounts to cover your skipped payments. If not, they would defer your payments so it would take longer for you to pay off your mortgage entirely.
Getting a mortgage payment deferral
With a mortgage payment deferral, you enter into an agreement with your bank. This agreement allows you to delay your mortgage payments for a specific period, usually up to four months. After the deferral period ends, you continue making your mortgage payments. Just like the ‘’skipping a payment’’ option, you’ll need to pay the amount you deferred down the road, so the time it takes to pay off your mortgage will be longer.
Extension of amortization
Extending your amortization period lowers your mortgage payments. Keep in mind that the longer you take to pay off your mortgage, the more you’ll pay in interest. Think twice before extending your amortization to lower your payments. The interest costs that you’ll need to pay will be higher. This may add up to thousands or tens of thousands of dollars over time.
There are many more options that could be available to you. What’s important is to consider how these options will affect your financial situation. You may end up paying more to pay off your mortgage and it may take you longer to do that. Your bank is required to provide options that are appropriate for your situation. If none of the options seem right, you may consider selling your home and buying a cheaper one or opt to rent instead.
Learn more about mortgage relief options at canada.ca/money.
