7 Tips To NOT Miss Any Mortgage Payments
Set up automatic payments
You can set up automatic payments with your lender so that the payment is automatically deducted from your bank account each month. This way, you don’t have to worry about forgetting to make a payment. (Every lender basically insists that you do this for your mortgage…but for consumer debt it is REALLY helpful!)
Communicate with your lender
If you’re having trouble making your mortgage payments, talk to your lender as soon as possible. They may be willing to work out a payment plan that fits your budget or provide other options for you to avoid missing payments.
This communication could include issuing a notice to your lender if you are unable to make the full payment. A notice will advise the lender of the amount of payment you are able to make at this time while still providing the necessities for your family to live. This notice advises the lender of the total amount you can honourably pay in good faith, demonstrates that you are proactively working with them towards a solution and prevents them from accessing additional sums directly from your bank account until you advise otherwise. Please contact me directly for more information.
Take advantage of lender skip payment privileges
Some lenders offer skip payment privileges to borrowers, which allow them to skip a payment without penalty. This can be useful in case of unexpected expenses or financial difficulties.
Build a rainy day fund
It’s a good idea to build up an emergency fund to cover unexpected expenses or temporary financial setbacks. This can help you avoid missing mortgage payments in the event of a financial emergency. Aim at first for a one-month fund then continue towards a 3-5 month nest egg.
Keep track of your payments
Keep track of your mortgage payments and due dates using a calendar or payment tracking software. This can help you stay on top of your payments, ensure money is available in your mortgage chequing account and avoid missing withdrawal due dates.
Budget your expenses
Make a budget and stick to it. This can help you avoid overspending and ensure that you have enough money to make your mortgage payments.
Plan ahead for future expenses
If you know you have upcoming expenses that may affect your ability to make mortgage payments, plan ahead and budget accordingly. This can help you avoid missing payments and stay on track with your mortgage.
Missing a Mortgage Payment
Missing mortgage payments can have serious repercussions for borrowers. Here are some of the potential consequences:
- Late fees: Most lenders charge late fees when a mortgage payment is missed. These fees can be significant and can add up quickly.
- Damage to credit score: Missing mortgage payments can damage a borrower’s credit score massively, which can make it difficult to obtain credit in the future. Late payments can remain on a credit report for up to seven years and can lower a borrower’s credit score by several points.
- Foreclosure: If a borrower misses multiple mortgage payments, the lender may initiate foreclosure proceedings. Foreclosure is the legal process by which a lender takes possession of a property and sells it to recover the outstanding debt. Foreclosure can result in the loss of the borrower’s home and can severely damage their credit score.
- Difficulty obtaining credit: If a borrower has missed mortgage payments in the past, it can be difficult to obtain credit in the future. Lenders are less likely to approve a loan or credit card application from someone with a history of late payments.
- Higher interest rates: Even if a borrower is approved for credit in the future, they may be subject to higher interest rates due to their past missed payments. This can make borrowing more expensive and can add up to significant costs over time.
Overall, missing mortgage payments can have serious financial consequences for borrowers. It’s important to make every effort to stay current on mortgage payments to avoid these potential pitfalls.
Sincerely,
Michael
PS – One of my hobbies is blogging about mortgages, debt and government policy. During the day I’m a MORTGAGE BROKER in Kelowna, BC!
Check out the Huber Mortgage Home Buyers Guide HERE
