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What Happens if I Miss My Mortgage Payment?

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Worrying about missing a mortgage payment can keep you up at night so it’s important to understand the repercussions of missing them. It’s also important to understand how unlikely this could happen. With the help of a good mortgage broker, you’ll have a reasonable rate and your payments should not be a far stretch for you. Thanks to higher qualifying rates, mortgage brokers in Victoria, BC, and other communities, must make sure that their clients pass the stress test at higher rates. Your actual rate will be lower than the qualifying rate.


The chances of missing a payment

Although the chances of missing a mortgage payment are low, it does happen. A missed mortgage payment can happen for any number of reasons. Perhaps you went travelling, were in between jobs, had to deal with a medical emergency or you just forgot. In BC, the Canadian Bankers Association has reported that only .25% of mortgages are currently in arrears. Breath easier knowing that although missed payments can happen, it isn’t common.


What Happens When You Miss a Payment

A mortgage is a contract. You’ve agreed to pay off a loan, and in trade, a lender has given you the money to buy your home. So when you fail to make a payment, you’re in breach of contract. However, missing one payment doesn’t automatically mean you’re in arrears. Generally speaking, you’d have to miss a few months of payments for this to happen.

When you miss a payment, a late fee is tacked on to your monthly payment. This needs to be paid in addition to next month’s scheduled payment. If you don’t pay for the month that you miss, you’ll be charged a late fee on every following month until you’ve caught up and paid for the late month. This is on top of the mortgage payments you’re making every month. They don’t stop because you missed a payment. This late fee that carries over month-to-month is known as a rolling late fee.

This may not sound so bad, but there are repercussions to this rolling late fee. It can have negative effects on your credit score if you don’t pay the missed mortgage payment.

If you make a payment for the missed month right away, your credit score isn’t going to be affected too severely. The longer you take to pay off the missed mortgage payment, the worse this will be for your score.


What You Can Do to Avoid Late Payments and Repercussions

The best thing you can do is pay your mortgage on time and not worry about any of this. Easier said than done of course, but if you passed the stress test of the qualifying rate, rates have not suddenly risen exponentially. And if your financial situation hasn’t taken a drastic turn for the worse, you should be fine. If you do fall behind on your mortgage payments, your best plan of action is to talk to your lender first. Sometimes lenders can help you, or at least be more lenient, with late fees. A qualified mortgage broker can give you advice on how to get back on track should your situation change, and you find making your payments difficult. You shouldn’t have to cross the days off on your calendar in an effort to keep track of your payments.


Are you looking for a qualified mortgage broker in Victoria, BC to help you navigate the confusing process of buying property? Let me help dispel some of your fear and confusion. Get in touch today.

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