Mortgage renewals have recently become a hot topic in the media, and understandably so. With rising interest rates, many individuals are concerned about the potential impact on their monthly payments.
We, your dedicated mortgage advisors, want to assure you that there are strategies available to alleviate these concerns and help minimize any payment shock you might experience during your upcoming renewal.
Don't panic.
It's natural to feel anxious when contemplating rate increases and their implications for your mortgage. However, being well-informed about the actual impact on your payments is crucial and it could be less than you expect.
For example, if you’ve got an existing 5-year fixed-rate mortgage at 2.00% and are facing a renewal rate of around 6.00%, that’s a tripling of interest rates. But that’s not to say that your payment will triple.
In this scenario, your payment would rise by roughly 40%. And that’s before exploring other options to reduce the monthly payment. For instance, if you re-extended your amortization from 20 years up to 30 years, the payment increase could be reduced to under 20%.
Consider Flexible Amortization Options
Extending your mortgage amortization is one viable strategy for some. While this might result in paying more interest over time, it significantly reduces your monthly payments, offering short-term financial relief without compromising your long-term financial stability.
Adjust Your Budget for Peace of Mind
Proactively adjusting your budget in anticipation of a higher interest rate is another step you can take. By making small changes now, you can better manage your finances when your mortgage rate increases. We are here to assist you in creating a budget aligned with your financial goals, easing the renewal process.
Explore Lump-Sum Payments
If feasible, making a lump-sum payment using investments or cash can further reduce your monthly payments. We can collaborate with your financial advisor to determine the best approach, whether it's keeping your funds invested or using them for a mortgage prepayment.
Explore Other Lender Options
If your mortgage is insured (meaning you made a down payment of less than 20%), it may also be worth exploring other lender options. Unlike uninsured mortgages, which face re-qualification under the mortgage stress test in the event you choose to switch lenders, insured mortgages do not face such restrictions, although you would still be required to meet the lender’s own underwriting standards and qualification criteria.
The Value of Working with a Mortgage Broker
We have access to a diverse network of lenders and we negotiate on your behalf to secure the best terms. In addition, we can even hold a rate for you until the end of your term, safeguarding you from potential further rate increases and providing peace of mind.
Reach Out Today!
Preparing for your mortgage renewal amidst rising interest rates is a proactive step toward securing your financial well-being. Rest assured, we are here to support you every step of the way.
If you have any questions, concerns, or simply wish to explore your mortgage renewal options further, please don't hesitate to reach out. |