Communication Guide With Your Lender During Financial Difficulty

Proactive communication with your lender is your best tool in case of financial difficulty. Lenders want to avoid foreclosures as much as you do, as these proceedings are long, costly, and hurt their balance sheet. By communicating before missing a payment, you demonstrate good faith and access a much wider range of options than if you wait until you are in default.

Preparing your call: the key to success

A well-prepared call considerably increases your chances of obtaining a favourable solution. The lender's representative evaluates your situation and credibility. The more complete your file and realistic your plan, the more options are available.

1. Gather your complete financial file: Prepare a detailed budget showing your current income (employment, Employment Insurance, other sources), fixed expenses (mortgage, taxes, insurance, utilities) and variable expenses, assets (savings, investments, home equity), and total debts. This financial portrait allows the lender to evaluate your situation and propose adapted solutions.
2. Clearly identify the cause of difficulty: Distinguish a temporary difficulty (job loss with return prospects, illness with expected recovery, ongoing separation) from a permanent difficulty (permanent disability, forced early retirement). Lenders have more options for temporary situations.
3. Call the right department: Specifically ask for the collections department, borrower assistance service, or loan modification service. General customer service often lacks the authority to offer the accommodations you need.
4. Communicate with honesty and precision: Explain your situation without exaggerating or minimizing. Indicate what you can pay (even a partial amount) and propose a plan to resume normal payments with a realistic timeline.
5. Get every agreement in writing: Any verbal agreement must be confirmed by letter or email from the lender. Note the representative's full name, file reference number, and the date of each communication.

Options the lender can offer

• Full payment deferral (1 to 6 months): no payment during the period, interest accrues to principal. Ideal for a temporary difficulty with expected return to normal.
• Amortization modification: extension to reduce monthly payment by 10 to 15%. Can be permanent or temporary. Reversible at next renewal.
• Interest-only payments: reduces payment by 40 to 60% for a period of 3 to 12 months. Principal does not decrease during this period.
• Temporary rate reduction: some lenders agree to temporarily reduce the rate to lower the payment during the difficulty period.
• Partial payment with catch-up plan: the lender accepts a reduced payment with a schedule to repay arrears once the situation is restored.

An AMF-certified broker communicates with your lender on your behalf, bringing their expertise and professional relationships to obtain the best possible terms. The broker knows each lender's internal policies and knows which options are actually available, even those not publicly announced.