How To Avoid Defaulting on Your Mortgage
While you may go weeks, months and even years without anything impacting your ability to make your regular mortgage payment, there may always come a day when something prevents you from doing so, and you enter into a period of financial uncertainty. Fortunately, whatever the reason for getting yourself into debt, early intervention can prevent you from defaulting on your mortgage.
It’s important to try and remember that no lender wants their customer to default on mortgage payments, and with this in mind, here are some handy tools and tips for ensuring that you can prevent yourself from ever doing exactly that:
Convert your mortgage
If you were to convert a variable-interest rate mortgage to a fixed-rate mortgage, you can help protect yourself against a sudden and unexpected hike in mortgage interest rates.
Ask your lender for a temporary payment deferral
In some circumstances, lenders may be willing to offer struggling customers a payment deferral, or some other such flexible option to provide them with short term relief. It may be helpful when pleading your case, if you were to have made any lump sum payments against your mortgage in the past, or if you’ve been on an accelerated payment schedule.
Extend your amortization period
Talk to your lender about the possibility of reducing your monthly payments by extending your amortization period; it can always be shortened again later should your financial circumstances change for the better.
Ask your lender about adding missed payments to the mortgage balance
Missing payments is something you want to avoid at all costs, but if this was unavoidable and you have missed some already, your lender might be willing to add them to the mortgage balance and extend the payment period accordingly.
Inquire about a tailored payment arrangement
In some circumstances, lenders may have programs designed to assist those homeowners who are experiencing temporary financial difficulties, and which can be tailored to meet their specific needs.
Talk to a mortgage broker
Mortgage brokers are always great people to talk to about any issue with your mortgage, as they not only know the in’s and outs of the many different mortgages available, but they often have good working relationships with lenders and can get you assistance that you might otherwise not have had access to.
Ultimately, you never want to get to the stage where you can’t afford your mortgage payments and you default. As soon as you have even the merest inkling that you might not be able to make a payment on time, consider whether there might be other areas of your life in which you can save money to be able to make timely payments, or seek help from a broker if the problem requires more than a spot of penny-pinching. But above all else, don’t panic as there is usually a solution that can help you avoid defaulting and get you back on track financially.