How to Survive High Mortgage Payments - Issue 378


It’s that time again: let’s talk about the recent Interest Rate Announcement. 

On September 6th, the Bank of Canada announced that they would be holding the interest rate steady at 5%. While this may be good news, the interest rates still remain high and almost unmanageable for many homeowners. The September market will reflect that, and it’s predicted that the fall market will see decreased demand compared to past years. 

(Will this actually be the case? Stay tuned for our September stats report at the beginning of October!)

This week, we turned to an expert to get the inside scoop on some ways that homeowners can manage these high interest rates.

Farhan Mahmood, an agent with us here at Keller Williams Home Group Realty, is also a Mortgage Broker at Real Mortgage Associates with 14 years of experience in residential and commercial mortgages. His goal with Farley Mortgage is aiming to provide the best mortgage solutions to his clients. He specializes in helping clients grow and maintain their real estate portfolio, and his focus is on taking the time to educate clients.

Farhan’s background in both real estate and the mortgage industry has given him a unique view on the impact that rising interest rates has had both on affordability and on homeowners themselves. Rising interest rates are increasingly a point of stress for homeowners, as monthly mortgage payments continue to climb. Here are some of Farhan’s best tips on how to manage these high mortgage payments and find solutions that work for you.

How to Survive High Mortgage Payments


Increase your Mortgage Amortization 

While extending the time it takes to pay off your mortgage does mean making more payments, it also means reducing the payment cost. Many lenders are allowing people to go this route in order to reduce monthly costs while still continuing to steadily work towards paying their full mortgage. While this results in paying extra interest over time temporarily, it also means decreasing your monthly payments to something that may be much more manageable short term.



Skip a mortgage payment

Some lenders will allow customers to skip a mortgage payment for a small fee. The   skipped payment, along with the interest will be added to the end of the amortization. While this won’t fully eliminate any costs, skipping a mortgage payment can give you more time to find the funds to continue to pay those high monthly payments.


Pre-payment Privileges

If you have some extra savings, prepayment may be a good route to take. Prepayment allows the homeowner to put a lump sum towards their mortgage. This will not only decrease the life of your mortgage, but also help to save on interest costs. If you are struggling to pay high monthly payments, ask your lender if you can take advantage of pre-payment options and in return, reduce your monthly payments.


Refinance when the rate drops

Even if you can’t avoid taking a high rate right now, don’t be discouraged - refinancing your mortgage can allow you to obtain a lower interest rate or shorten the term of your mortgage. Continue watching the rate and consider refinancing when the mortgage rate drops.


Rent out part of your property

If possible, consider renting out a part of your property to help counter your mortgage costs. “House hacking” allows you to generate income from your property to cover the cost of your mortgage. The renter essentially pays your mortgage for you! Currently, there are many people, especially students, struggling to find a short term place to rent, and rentals are charging on average $800 - $1000 per month - a significant amount to put towards your mortgage payments.


Generate additional income

If none of these ideas work for you, consider finding ways to earn extra income that can help offset the impact of high mortgage rates. This could be taking on a part-time job, freelancing, or starting a small business.


These are just a few options for you to consider to help you survive high mortgage payments. Making changes to your mortgage can be a big financial decision and quite stressful. If you are struggling with decisions surrounding your mortgage, please reach out to a mortgage broker to see if they can help find a personalized solution for you.

 

Farhan Mahmood

Mortgage Broker, License #: M14000068

Real Mortgage Associates Inc.

FSCO Licence # 10464

 


Our team, just like Farhan, believes in a consultative and educational approach when helping clients navigate these hurdles in the market. Reach out if you are interested in learning more or in need of guidance to make sense of this market.

Enjoy the weekend & thanks for reading!


Paul


Appointment Calendar: https://calendly.com/homegrouprealty

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