If your mortgage is coming up for renewal and you’re worried about the higher rate and increased monthly payments, here are some things you could think about doing rather than just waiting anxiously:
1. Talk to your lender about their current rates and figure out what the actual numbers are going to be. How much more will you have to pay each month?
2. If you think you’re going to have a really hard time making those higher payments, ask your lender about what your other options are for getting them lower. Extending the number of years you’ll have a mortgage isn’t ideal and will increase how much you ultimately pay in interest, but it sure beats defaulting on your mortgage.
3. Start working on figuring out where you can cut expenses from your budget to make the increased payments affordable (I know, easier said than done with the recent inflation we’ve seen, but there’s usually wriggle room to be found if you look hard enough.)
4. Meanwhile, if you’re able to, talk to a mortgage broker or shop around your mortgage yourself and see if there are lenders who can offer you better rates.
5. In a similar vein, if you have some equity built up in your home (say over 40-50%+), send me a message and mention that you’d like to learn more about a HELOC (Home Equity Line of Credit). More specifically, I’ve had great luck converting clients’ mortgages to all-in-one accounts where you essentially combine your mortgage and chequing account. It’s a great way to give yourself more flexibility in the short term, and can actually help you pay off your mortgage faster in the long run (with a bit of discipline).
The most important thing is to take action, not just stick your head in the sand and hope it’s all going to work out.
Get clear on how rough the situation really is, what your options are for making it better, and try to make the best of a bad situation.