5 Jan, 2024
What Happens if You Miss a Private Mortgage Payment in Toronto?

Getting a Private Mortgage in Toronto can offer financial flexibility, but what happens if you find yourself unable to make a payment? In this article, we’ll explore the consequences of missing a private mortgage payment, shedding light on the steps you can take and the potential impacts on your financial situation.

Understanding Private Mortgages in Ontario

Private Mortgages in Ontario are usually obtained from private lenders as they provide a different kind of funding for people who might have trouble qualifying for conventional bank loans. These mortgages are secured by the property itself, providing lenders with a level of security. While private mortgages offer flexibility, it’s crucial to recognize the responsibilities that come with them, including making timely payments.

Consequences of Missing a Payment

A missed payment can lead to the following consequences:

  1. Late Payment Fees

When you miss a private mortgage payment, the lender may impose late payment fees. It’s essential to check your loan agreement to understand the specific terms regarding late fees. These costs can soon build up and have an effect on your financial status.

  1. Interest Accumulation

Missing a payment doesn’t mean the interest stops accruing. In most cases, interest continues to accumulate on the outstanding balance. This can result in a higher overall repayment amount over the life of the loan.

  1. Impact on Credit Score

Just like with any loan, missing mortgage payments can negatively impact your credit score. This makes it harder to secure future loans or credit, which in turn affects your financial options.

  1. Communication with the Lender

It’s crucial to communicate with your private lender if you anticipate missing a payment. Some lenders may consider a temporary solution, such as a modified payment plan. Maintaining open communication with your lender is key to working together and resolving financial challenges.

Communication with the Lender

Is There a Grace Period for Private Mortgages in Toronto?

Most private lenders offer a 15-day grace period after the due date, allowing borrowers some flexibility. If you make the payment within this period, it’s considered late, but the consequences are less severe. For instance, your credit score may not be significantly impacted, but you could incur late fees.

Once the 30-day mark is crossed, the payment is officially considered missed, and the stakes are higher. Missing payments beyond this deadline can lead to more severe repercussions, including a negative impact on your credit score, or a foreclosure or power of sale process.

Steps to Take If You Miss a Payment

If you find yourself in a situation where you’ve missed a mortgage payment, it’s important to take prompt and proactive steps to address the issue.

  1. Contact Your Lender

As soon as you realize you’ll miss a payment, reach out to your private lender. Explain your situation and discuss potential solutions. Some lenders may be open to temporary modifications to help you get back on track.

  1. Review Your Loan Agreement

Before signing any documents, it’s crucial to have a clear understanding of the terms outlined in your loan agreement. This will offer valuable insights into the consequences of missed payments. Pay close attention to clauses related to default and foreclosure. 

In complex financial matters like these, seeking professional advice can be beneficial to ensure you understand all aspects and make informed decisions.

  1. Explore Refinancing Options

Depending on your financial situation, refinancing your private mortgage may be an option. This involves negotiating a new loan agreement with your current lender or seeking a new lender to pay off the existing mortgage.

  1. Seek Professional Advice

In times of financial difficulty, it is advisable to consult with a financial advisor or mortgage broker. They can offer guidance on possible solutions and assist you in making well-informed decisions.


While missing a private mortgage payment can have consequences, proactive communication with your lender and exploring potential solutions can help mitigate the impact on your financial well-being. 

If you find yourself facing challenges, consider reaching out to ORION Financial, a trusted mortgage broker in Toronto. We are dedicated to helping clients understand private mortgages and can offer personalized guidance based on your specific situation.

Contact us today for expert assistance and a path toward financial stability.

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