Mortgage help in Canada: programs available to those struggling to make mortgage payments

With the eighth rate hike in a row, if you’re looking for mortgage help in Canada, you’re not alone. Struggling to pay your mortgage? There are mortgage help programs available to all Canadians. Want to talk to someone about your options?

Book a call with the experts at Spergel today.

In this article, we share how you can gain mortgage help in Canada if you are struggling to make your payments. We understand that your home is likely your largest asset, and that finding a way out of debt while keeping your home is probably your top priority. No matter how bad you may feel your financial circumstances are, there is always a debt relief solution to help you. At Spergel, we will start by reviewing your finances to assess how much your mortgage payments are creating your financial difficulties, and if other debts and bills are the real issue in a world where the cost of living is fast increasing.

Book a free, no-obligation consultation with a Licensed Insolvency Trustee today. At Spergel, our Licensed Insolvency Trustees have been providing mortgage help in Canada for over thirty years.

Mortgage relief programs are available in Canada

If you are unsure whether to downsize or sell your home, or if you feel other debt is causing you to regularly miss your mortgage payments, here are some of the best ways to gain mortgage help in Canada:

File a consumer proposal

For those struggling to make their mortgage payments in a world of increasing interest rates and a rapidly rising cost of living, there is an ideal mortgage relief program available to Canadians: a consumer proposal. Filing a consumer proposal allows you to reduce your debts by up to a staggering 80% while enabling you to keep your house. It is the process of proposing an affordable monthly repayment amount to your creditors – usually just slightly more than they would receive in a bankruptcy – in exchange for clearance of your unsecured debts. A substantial reduction in these debts can free you up to make your mortgage payments much more manageable and affordable. A popular bankruptcy alternative, some additional advantages of a consumer proposal include keeping your assets and full protection from your creditors. With a consumer proposal, your Licensed Insolvency Trustee never has the responsibility to sell your home or assets so you can rest assured.

Filing bankruptcy

Contrary to popular belief, filing bankruptcy does not mean you lose your home. Bankruptcy is the legal process of assigning any non-exempt assets you may have over to your Licensed Insolvency Trustee in exchange for clearance from your unsecured debts. Legally, your creditors are owed the value of your home equity once reasonable selling costs are deducted. If, however, you can include the value of the equity to your Licensed Insolvency Trustee as part of your bankruptcy payments, it is possible to keep your home through bankruptcy. In addition, each province has its own list of exempt assets during bankruptcy too – this includes some basic items including furniture and work materials. See Ontario’s list of bankruptcy exemptions, for example. Should you fail to include your equity in your bankruptcy payments, your Licensed Insolvency Trustee will have no choice but to sell your house in order to realize on the equity for your creditors. Your trustee will support you however they can to try and ensure you are able to keep your home.

Speak to your mortgage lender

For some Canadians, the right solution may be to use the equity in their home to consolidate other debts into a more affordable monthly payment. This could be either a secured line of credit, or a new mortgage with an extended amortization period. In order to arrange this, you will need to contact your mortgage lender or financial institution. You need to consider recent shifts in mortgage legislation before doing so – for instance, lenders are restricted to lending you 80% of the value of your home. This can work if you have sufficient equity in your home to support all your outstanding debts. As well as needing to secure your house to the property as collateral, you will need a good credit score in order to borrow more. If your mortgage is in arrears, it is unlikely you will qualify. If the bank cannot help you because of your credit score or if you have insufficient equity, another form of debt relief like a consumer proposal or bankruptcy may be more suitable for your circumstances. At Spergel, our experienced Licensed Insolvency Trustees will review your finances and are well equipped to advise you on this matter.

Consider selling or downsizing your home

If your primary financial problem is making your mortgage payments because they simply will not fit within your budget and you cannot increase your income, selling your home may be the most sensible decision. Although certainly not an easy decision, renting for some time may help you to balance out your finances without the fear of losing your home. Equally, you may be able to sell your home for a value that is higher than the mortgage. In this case, you can use your equity towards a down payment for a smaller home, or it could cover your rent for a period of time. You should be wary, however, that you may have a shortfall in your mortgage if it sells for less. In this instance, this shortfall would be considered an unsecured debt, which means it can be filed as part of a consumer proposal or bankruptcy.

Get a second mortgage to refinance your other debts

If you think your financial struggles are related to other unsecured debts outside of your mortgage – perhaps credit card debt, payday loans, or tax debt – you may consider refinancing with a second mortgage if you think you have equity in your home. Doing so can, however, put yourself in a risky situation for bankruptcy with a high-ratio mortgage scenario. A debt consolidation loan may be more appropriate if secured by your home – but only if you can commit to making all of your monthly payments in full and on time to cover your other debts.

Are you late on your mortgage payments? 

The first step of understanding how to get mortgage help in Canada is assessing whether or not you are current on your mortgage payments. If you decide to file a form of debt relief like a consumer proposal or a bankruptcy, you will not necessarily lose your home – however, if your mortgage payments are in arrears, your lender will eventually take action to repossess your home, either through foreclosure or power of sale depending on your province of residence. For this reason, you should try your very best to catch up on your mortgage payments. This will then help you to assess your debt relief options when it comes to tackling your other debts, without the added pressure of a potential foreclosure on your home. If this is a struggle for you right now, our Licensed Insolvency Trustees can review your financial situation and recommend ways to make your mortgage payments become more manageable. Request a call today.

How much can you afford to pay to get out of debt?

When considering mortgage help in Canada and how to get out of debt, you need to think seriously about what you can realistically afford to pay. From the debt relief options above, you can either choose routes whereby you will need to pay your debt in full, or just partially. Here is a summary of the potential pathways available to give you an at-a-glance view:

Thankfully, you do not need to risk your home because of mounting unsecured debts. A Licensed Insolvency Trustee will help you to determine whether or not you can repay your debts by yourself, or if you need mortgage help in Canada. Even if you cannot repay your debts in full, it is possible to keep your home. Book a free consultation today to see how Spergel can help you to gain mortgage help in Canada and get out of debt sooner.