Struggling with Your Mortgage? Help is Here

Debt, like many things in life, doesn't hit you all at once. It takes a while to get in over your head, and once you're there, it can be a very lonely place.

The thing is, in today’s economy, many people are in that very boat. The good news is that companies across the board are taking steps to help. In cases of home ownership, mortgage insurers are partnering with lenders to help Canadian homeowners weather this storm.

Talk to your lender

If you've recently found yourself in a financial position that could prevent you from making your mortgage payments, the last thing you probably want is for your lender to find out. But the truth is, the earlier you communicate the situation to your lender, the more they can help you.

Thanks to mortgage default insurance - insurance that is required on mortgages obtained with less than a 20% down payment - lenders are protected against defaults. That being said, neither the insurers nor the lenders want to see homeowners default, so they've implemented home ownership assistance programs to assist homeowners in financial trouble.

New homeowner offerings

While these programs have existed for a while, companies such as Genworth Financial Canada and Canada Mortgage and Housing Corporation (CMHC) have either expanded their programs or ramped up their marketing efforts to ensure Canadians know they're available.

Genworth Financial Canada has recently launched an online tool as part of its Homeowner Assistance Program that identifies solutions for homeowners who are (or might be) facing financial hardship. Potential solutions include:

Capitalized arrears - an option that provides temporary relief with the understanding that the amount owed will be added to the principal mortgage balance and repaid at a future date;

Increased amortization - this depends on the current amortization schedule of the mortgage. If there's room for it to be lengthened, this will decrease the monthly mortgage payments;

Partial or shared payment plan - if you can afford part of your monthly payment but not all of it, Genworth will temporarily pay the difference to the lender with the understanding that the homeowner will repay that amount at a later date.

The goal of the program is to help homeowners through temporary financial difficulties - it's not meant for individuals who chronically miss their mortgage payments. In addition, homeowners must have a mortgage insured by Genworth, although other insurers, CMHC and AIG, offer similar programs.

If you're uncertain as to who insures your mortgage, or if you placed a down payment of more than 20%, it's best to contact your lender before you fall too behind in your payments.

Do it for your credit rating

Missing monthly mortgage payments or, worse, foreclosing on your home can devastate your credit score. Delinquencies and other negative information can harm your ability to get new credit or loans for 6 years or longer, depending on which province or territory you live in. Homeowner assistant programs may help to keep your credit fairly intact until you can get back on your feet.