What You Need to Know About Mortgage Arrears

Defaulting on your mortgage may have serious consequences. If the borrower breaches any terms of the mortgage or misses regular payments, the lender has many firm remedies they may exercise to protect their investment. Making your regular payments on time and keeping within the terms of the loan will spare you potential foreclosure and plenty of grief.

What are mortgage arrears?

As in any contract, your mortgage agreement will outline all the terms and conditions related to your loan, specific to you. You fall into mortgage arrears when you start falling behind on your payments – for example, missing a mortgage payment. Missing mortgage payments go against the terms agreed upon when you initial took out the loan, and is to be avoided as much as possible. Any breach of the terms and conditions by the borrower may trigger the lender to take corrective action.

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Why do people fall into mortgage arrears?

Some of the most common reasons for default would be for:

• failing to make your regular mortgage payment on time
• cancelling or allowing you home insurance expire and then neglect to renew or obtain a new policy
• omitting to pay and maintain property taxes / amenities / strata fees (if applicable)
• not obeying municipal bylaws & regulations
• failure to keep the property in a good and habitable condition
• using the property for illegal activities

Given the above reasons, one may find themselves in a difficult situation. However, there are also many options for the borrower to consider if they are in default of the mortgage contract. 
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How do I get out of mortgage arrears?

Some of solutions for those currently behind in mortgage payments include:

• working out a payment plan outside of the normal payment schedule with the lender.  You may negotiate with the lender and agree to hold off on payments for a short while, or make partial payments in the interim.
  
• refinancing the mortgage with a different lender, and paying out the current lender
  
• listing the property for sale
  
• offer up additional security acceptable to the lender

Due to the fact that mortgage finance makes up the bulk of real estate transactions, there is a greater likelihood of challenges and problems. Borrowers are faced with high unemployment, failing businesses, times of recession and so many unexpected things in life, which may result in financial turmoil.  There are several solutions for the borrower if behind on their mortgage.

Private Mortgage Lenders for Bad Credit

It would be wise to speak with a mortgage broker to get your options laid out for you if you are faced with mortgage arrears and imminent foreclosure. If you have bad credit and are looking for private mortgage lenders, and live in Surrey, Vancouver, Abbotsford, or elsewhere in the Lower Mainland, give us a call today at 604.620.2697. You don’t have to do this alone – let’s discuss your options.