Rising mortgage rates? 3 strategies that could help

by | Mar 24, 2024 | Finance and Business, Home and Living

Rising interest rates and higher prices are leaving many Canadians wondering how to keep up with expenses, particularly a mortgage. In fact, 62 per cent of Canadians believe that housing affordability will worsen in 2024, and 46 per cent think that mortgage rates will increase in the next year according to IG Wealth Management’s 2023 Financial Confidence Index, which tracks and reports on Canadians’ overall financial confidence.

“Mortgages are often one of Canadians’ largest debts,” says Alana Riley, head of mortgage, insurance and banking at IG Wealth Management. “With increased interest rates, many homeowners are likely feeling pinched. However, there are strategies to be considered to help lower stress and make things more manageable.”

Here are three strategies to help manage your mortgage payments:

Consider extending your amortization period

By extending the amortization period of your mortgage, which is the length of time it takes to pay off your mortgage in full, there’s the opportunity to make your regular payments more manageable. Taking more time may allow for lower payments and more budget flexibility.

Take advantage of contract renewals

When your mortgage comes up for renewal, use this to your advantage by considering making a lump-sum payment and weighing the pros and cons of a fixed- or variable-rate mortgage. Meeting with your financial advisor at least three months prior to your scheduled renewal date can help set expectations and give you time to understand your options.

Include your mortgage in your full financial picture

Many view their mortgage payments as a “siloed” expense and don’t incorporate this cost into their broader financial plan. But since it’s often their single largest expense, it’s important that mortgage payments are always included in the full view of your finances. Working with a financial advisor who is familiar with your entire financial situation, not just your mortgage, will help balance your obligations.

With current renewal rates generally higher for most Canadian mortgage holders, and all mortgages varying with different terms and conditions, the need to seek advice to ensure all your financial needs are taken into consideration is more important than ever. It’ll go a long way towards building your financial confidence and wellbeing.

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