With an estimated 23% of mortgage holders coming up for renewal in 2024 and 50% in the next 2 years, there are a significant number of people are facing the realistic possibility of payment shock. If your 5 year term began in 2019, you likely enjoyed rates around 3.00%. A $500,000 at that rate, spread over 25 years, would set you back $2366 per month. Fast forward to today's rates, and that same mortgage could now cost over $2870 per month --- an increase of over $500!
An extra $500 each month isn't just a bump in the road for most Albertans. If you are in the same position as we are you have already been faced with rising costs to almost every aspect of your finances including your groceries, utilities, property taxes, fuel, and insurance, its more important than ever to approach your mortgage renewal strategically. Here are 4 steps to help ease the pain:
Be Proactive!
Start Early: Contact your mortgage broker 3-6 months before your renewal date. Budgeting in advance can help you understand if you can handle the increased payments. If budgeting isn't your forte, I can help you figure it out.
2. Put in the work!
Consider Switching Lenders: Sometimes the best mortgage for you isn't with your current lender. After you’ve filled out an application and provided the necessary documents, your broker can review your entire situation and find the best scenario.
3. Be open and honest!
Candid Conversations: Your broker will have questions about your financial situation. Are higher payments stressing you out? Do you have other debts causing financial strain? Honest answers to these questions are crucial for assessing the best options for you. If your banker or broker isn't asking these questions, they’re not fully serving you.
4. Keep an open mind!
Explore All Options: Mortgage brokers have various tools to help mitigate payment shock. These might include extending your amortization period to lower monthly payments or consolidating high-interest debts into your mortgage. We can also provide a simple payment budget to show potential savings.
Why Proactivity Matters:
When you receive a renewal letter from your lender, remember that their primary goal is to maximize profits for their shareholders, not necessarily to offer you the best deal. This is why it's essential to take control of your finances and consider all your options. A mortgage broker, with access to a wide range of lenders, can provide you with choices that a single bank cannot.
My Promise to You:
I work for you, not the shareholders. I am committed to acting in your best interest and finding the best possible mortgage solution for your situation. Take advantage of my free, no-obligation services to see how I can help improve your financial health.al promise.
Feel free to reach out to discuss your mortgage renewal or any other financial concerns. Together, we can navigate these changes and find the best path forward for your financial future.
By following these steps and working closely with a mortgage broker, you can better manage the impact of rising interest rates and ensure your financial stability during your mortgage renewal.
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