The Consequences of Mortgage Delinquency

Posted on 15th December 2015

Buying a home can be very exciting; but owning a home comes with new financial responsibilities. One of your biggest financial obligations is to make sure you pay your mortgage on time. Missing a mortgage payment means you are delinquent. If you have a mortgage, it’s important to understand the consequences of mortgage delinquency and how you can avoid it.

Consequences of Defaulting on Your Mortgage

You need to factor in more than the price of your dream home when it comes to figuring out your budget. In addition to your mortgage, you need to consider additional costs associated with home ownership. That includes property taxes, insurance, maintenance costs, and operational costs like hydro. Then there are day-to-day expenses.

If you aren’t prepared or face an unexpected expense, it doesn’t take long to get behind with bills.

When you first got your mortgage, you probably set up a payment schedule of either weekly, bi-weekly, or monthly payments. Regardless of which payment schedule you chose, it’s important to make your mortgage payments on time.

Missing a mortgage payment or even making a late payment is called delinquency. Mortgage delinquency can, at the very least, result in late charges. Late charges for mortgage negligence can be quite steep. Depending on the lender, the longer you are delinquent with your mortgage payment, the higher the late charge climbs.

Mortgage negligence can also link to serious consequences like foreclosure. If you do not get your mortgage payments up-to-date in a timely manner, your mortgage will pass into default, at which point you risk foreclosure. This means you lose your home.

Not only do you lose your home, you face significant financial loss. Defaulting or foreclosure on your mortgage will also negatively impact your credit score. While you may think a bad credit score is the least of your worries, you need to keep in mind that mortgage delinquency today will make it very difficult to get a loan in the future.

If you do manage to get a loan, your previous mortgage negligence means you will pay a significantly higher interest rate.

How to Avoid Mortgage Delinquency

Record low interest rates have made it easier for Canadians to borrow more money from lenders. Low interest rates have also helped fuel the red-hot housing market in the Greater Toronto Area and places like Hamilton.

Rising housing prices means home owners in Toronto are wealthier. At least on paper. That can translate into increased borrowing against your property. And even more debt. This might not be an issue when interest rates are low, but what happens when interest rates start to rise?

For many home owners in Toronto, that could lead to mortgage default. In fact, nearly one in six Canadians (16%) are unable to handle a $500 increase in their monthly mortgage payment. More than a quarter of Canadians (27%) would need to review their budget. And 26% said they would be concerned, but could probably manage. Together, that represents roughly 70% of homeowners!1

The best way to avoid mortgage delinquency, default, or foreclosure, is to make a budget and to stick to it. Review your budget monthly and see if you are meeting your financial obligations.

You also need to plan for operating costs, like maintenance and repairs. Or, if you live in a condominium, that includes monthly maintenance fees. Then there are unexpected fees. Even if you buy a new home, it will need repairs. Unexpected expenses can add up and throw your well-planned budget into disarray.

While it is a great idea to set aside some money for an emergency fund, the fact of the matter is, most Torontonians do not have the luxury of having three months of mortgage payments set aside for a rainy day. Toronto’s Leading Provider of Mortgage and Debt Consolidation Loans

Mortgage delinquencies should be avoided at all costs. Not only could you face steep penalties, your credit score could take a serious hit. Mortgage negligence could also lead to foreclosure.

Toronto real estate continues to be an excellent investment opportunity. And with interest rates expected to remain near record lows for the near-term, it’s an excellent time for first-time home buyers to step onto the property ladder.

That said, it’s also important to understand how much of a mortgage you can afford. Interest rates will start to rise. And when they do, you need to know that you can still pay your monthly mortgage as well as the rest of your financial obligations.

The independent, licensed agents at can help you find the best mortgage at the best rates. They will walk you through the home buying process and make sure your mortgage fits both your near-term and long-term financial and lifestyle goals.

Or, if you find your budget stretched and you are overwhelmed with debt and on the verge of mortgage delinquency or have already missed a mortgage payment, the experts at can help with debt consolidation.

As the country’s leading private mortgage professionals , has access to hundreds of lenders. Where Canada’s big banks only try and sell their products, whether they suit your needs or not, the independent agents at put their clients first.

To see what kind of mortgage or loan you qualify for, contact today . Or apply online and a lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.


Nearly one in six Canadians could not handle $500 increase in mortgage payment: poll, The Globe and Mail web site;

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