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What Happens and What Do I Do When I Can’t Afford My Mortgage?

By Troy Tisserand

Owning a home is a significant accomplishment, but financial hardships can sometimes make it challenging to meet mortgage payments. Recognizing the first signs of financial trouble is crucial in order to take proactive steps to address the situation. In this blog post, we will discuss what to do if you can’t afford your mortgage and explore the available options, offer a step-by-step guide, and highlight programs and services that can provide mortgage assistance. Additionally, we will address the topic of mortgage renewals and conclude with important considerations.

Recognizing the First Signs of Financial Trouble

Financial difficulties can arise due to various reasons, such as job loss, unexpected medical bills, or a change in financial circumstances. It is essential to be aware of the warning signs that indicate potential trouble in meeting your mortgage payments. Some of these signs include:

  • Interest rates going up
  • Overall recession of the economy 
  • Credit card balances creeping up
  • Looking for consolidation or 2nd mortgages
  • You start to think of your home as an expense or burden you can’t afford any longer
  • You think you might have to sell your home or move somewhere cheaper

If you identify with any of these signs, it’s crucial to take immediate action to address the situation before it worsens.

What to Do if You Can’t Afford to Pay Your Mortgage

When you find yourself unable to afford your mortgage, the worst thing you can do is ignore the problem. If you don’t make your mortgage payments, a few things will generally happen:

  1. Missed payments or late payments may be reported onto your credit bureau and or affect your ability to renew your mortgage
  2. You may need to pay penalties or late fees
  3. Missed or late mortgage payments may be the early signs of financial trouble ahead, including losing your home through a foreclosure

So here’s a quick breakdown of things you can do immediately if you can’t afford to pay your mortgage. 

  1. Contact your lender 
  2. Request the lender for a grace period or payment deferral (depends on lender)
  3. Explore refinancing options 
  4. Seek professional advice 

Trying to avoid selling your house? Follow the exact process we help our clients through [Free]

Should I let my house go into foreclosure? 

When a consumer can no longer pay their mortgage, they are limited in the number of choices they make to fix their financial situation.  

  • Be proactive and sell your house ahead of a foreclosure
  • Drag out the foreclosure process
  • Sell other assets to catch up on your mortgage payments
  • Rent out part of your home for additional income
  • Obtain a 2nd mortgage or an equity takeout to catch up on your payments
  • Move to Kazakhstan, change your name, and live out remaining years as a hermit in a cave eating insects

The examples above are for demonstration purposes only and should not be considered legal advice.  To better understand your options, please reach out to a 4 Pillars foreclosure specialist for instructions on how to deal with your specific situation.

Lender vs homeowner driven foreclosure?

The foreclosure process is when upon default of your mortgage, a lender secured against your property applies to the courts to sell the property in an effort to recoup their outstanding loan(s).

At no time is the foreclosure process meant to benefit the homeowner. It may be said that there are two kinds of foreclosure: lender driven and homeowner driven Foreclsoure

Lender driven foreclosure 

  • Pros: 
    • By doing nothing the property is returned to the lender and they ‘system’ sells it on behalf of the previous homeowner
  • Cons:
    • This process does not benefit the homeowner
    • The costs can be substantial
    • The homeowner is responsible for any financial shortfall
    • The sale price of the home is not maximized
    • The house is sold “as is” generally selling lower than market value

Homeowner driven foreclosure 

  • Pros: 
    • The homeowner is in control of the situation
    • It will generally cost far less as huge legal fees are not incurred
    • The house sale price can be maximized thereby benefiting the homeowner
    • The house can be staged thereby improving its curb appeal
  • Cons:
    • It does take a bit more planning and energy but the benefits are worth the effort if there is equity in house 

Step-by-Step Guide on what to do if you can’t afford to pay mortgage

In order to determine what is your best option here is part of your mortgage foreclosure checklist 

  1. Determine what the 30-day estimated sale price of your home is.  The best way to do this is to ask a local realtor.  If you live in a neighborhood drive around and look for realtors who may already have homes for sale in your area.  They will have a much better sense of the local home dynamics
    • Hint: Realtors get listings by telling consumers their house is worth more than it is. You don’t want that price.  You want a realistic 30 day sale price.
  2. Determine what your current mortgage balance is
  3. Call your mortgage lender and ask what the penalty is for an early repayment

Download our full checklist of tips and tricks you can use when the mortgage gets too high

Programs and Services Available for Mortgage Assistance

When facing financial difficulties related to your mortgage, various programs and services can provide assistance. Some notable examples include:

Government of Canada

The federal government of Canada has a complete page filled with information related to mortgage deferrals. Overall the government of Canada is a great resource to find reliable information related to paying off your debt. 

City Programs

Some cities will offer financial support for homeowners. For example, the city of Toronto offers multiple programs related to financial low-income homeowners, paying water and tax bills, renovations and more. 

4 Pillars Financial Wellness Advocates

The debt industry is complex and designed to work in favour of banks, credit card companies, and creditors. We’re changing that. At 4 Pillars, we use education and our extensive experience to show you the best path out of debt based on your unique financial situation.  Please reach out to a 4 Pillars foreclosure specialist for instructions on how to deal with your specific situation.

I Have a Mortgage Renewal Coming Up Soon

You may be able to make your mortgage payments now, but if you have a mortgage renewal coming up you could be in for higher payments due to rising interest rates. It’s important that you plan now for how rising interest rates will impact your mortgage renewal.

You will need to follow our Foreclosure checklist as well as this one step:

If you have a mortgage renewal coming up in the next 6 to 12 months, contact your lender and ask them to estimate what the future mortgage will be. 

With this new higher mortgage payment review your budget and see based on your current income if you can afford to live in your home If you have a budgeting shortfall, now is the time to start planning to sell your house before your mortgage comes up for renewal

Remember: If you have a budgeting shortfall every month, the money has to come from somewhere else and in most cases, it means borrowing to make your mortgage payments.  As you try to continue to live in your house, you will fall farther and farther into debt until, eventually you will run out of credit and lose the house anyway.  In this scenario, you have made your financial situation much worse.


Financial difficulties can arise unexpectedly, making it challenging to afford your mortgage. Recognizing the signs of financial trouble and taking prompt action is vital to address the situation effectively. Whether it’s exploring assistance programs, assessing refinancing options, or considering selling your home, there are steps you can take to alleviate the burden. Seeking professional advice and guidance ensures that you make informed decisions tailored to your specific circumstances. Remember, you are not alone, and there are resources available to help you navigate this challenging situation.

Download the free step by step guide on what to do when you can’t afford your home:

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