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The challenges of having a mortgage extend far beyond just obtaining one in the first place. Monthly mortgage payments are non-negotiable and missing them can quickly put you in arrears. This means you owe money you simply should have paid out already. Tax arrears are similar in that you owe money to the government. However, both situations translate to putting yourself in significant financial trouble.

Mortgage Arrears

With a mortgage, your Ontario lender can take legal action to reclaim their money, pursuing what is called ‘power of sale’. This means you would be evicted from your home and they would sell it in order to get their money. From start to finish, that process could take an approximate period of three months.

Although you would receive any additional profits from the sale, you would incur the applicable power of sale fees and still be left without a home. You may stop the power of sale before it is carried out, but this requires help from a financial expert.

Tax Arrears

With taxes, the Canada Revenue Agency has the right to redirect your tax refunds or tax credit to pay off your debt. They may alternatively take action to garnish your wages, or even seize your property if needed—including your home, which they can sell at auction. You also incur the significant interest rates associated with tax arrears, making it even more unattractive to find yourself in this position.

Avoiding Arrears

Neglecting such significant payments as taxes or mortgage can result in other serious financial issues. When it comes to obtaining any loans, you may be forced to go through only a private lender. However, you may simply be forced to sell your property and pursue major debt solutions.

Obviously, it is best to make payments on your mortgage and taxes as quickly and efficiently as possible. If you find yourself struggling to keep up with these, however, it may be necessary to seek professional assistance from a financial expert. Tax or mortgage arrears are serious and can lead to additional hardship.

When your finances do not measure up to the standard requirements of being pre-approved for a mortgage, some people may not know where to turn. Acquiring bad credit can be detrimental to various aspects of your life, but especially when striving to obtain a home equity loan.

Although individuals with bad credit may not qualify to go the traditional route with a large bank, there are mortgage brokers, financial institutions and private lenders who work with people in these specific circumstances. They offer enhanced flexibility and freedom, in fact.

It is recommended to check your credit score before seeking a mortgage or home equity loan if you are worried that yours may be low; this can be done free of charge in Canada through TransUnion and Equifax, as well as some newer service companies like Mogo Mortgage and Borrowell. Someone with bad credit typically has a credit score below 600 out of a possible 900 (the lowest is 300).

While technically considered average, a score between 600 and 700 can be eligible for a bad credit mortgage if an individual has solid income sources—which is more difficult for those who work on commission or work for themselves, but still possible to determine a projection of how much you will make based on your averages.

A reputable lender can provide a bad credit mortgage or home equity loan despite their client having a lower credit score. However, it is equally important for that individual not to look far beyond one’s means for a home to avoid being unable to make mortgage or home equity loan payments moving forward.

Someone with bad credit must have solid approval of their property to assure it is in average to good condition. Although individuals can still obtain a bad credit mortgage, they may be sanctioned with greater interest rates and extra fees from lenders and mortgage brokers as a result. Whether good or bad, a person’s credit is considered a direct reflection of how risky they are considered to loan money to.