Although we’ve been warned for some time that this is imminent, we’re still surprised when it happens.
We’re not talking about the first big snowfall here, we’re talking about mortgage rates.
A quarter point here, a quarter point there, we made it. But now, to curb inflation, the Bank of Canada has not hesitated to raise interest rates repeatedly.
Overview of the location
The situation is catastrophic for many. The Bank of Canada says about half of adjustable-rate and fixed-rate mortgages have been hit hard. Many are no longer able to pay not only the principal portion of their monthly payment, but also the interest portion.
Result: The amortization periods are extended automatically. Canadian banks have never had so many mortgages with payback times longer than 30 years.
Operations to be performed
So you need to renew your mortgage, but what to do?
Don’t panic, keep calm and explore all options. Let’s look at the basics of the operations to be performed:
- A few months before your loan expires, you will receive an extension offer from your financial institution. By reserving your fare as early as possible, you are protected from further rate hikes.
- At the same time, examine the possibility of refinancing your property in order to benefit from the added value acquired over the years.
- Contact a mortgage broker who will give you an overview of all offers from financial institutions and enable you to find the best interest rate.
- Investigate the possibility of selling your home to live in a smaller condo or apartment. This is how you benefit from the added value of your property.
Not the first time
Inflation is not a new economic phenomenon, and it is not the first time the Bank of Canada has raised interest rates to contain it.
Those not so young will remember that in the 1980s, financial institutions responded strongly to these increases by taking over homes whose owners could no longer meet their obligations.
Result: They were faced with huge real estate parks that they had to manage and maintain. But now it no longer belongs to a financial institution to manage buildings.
Since then they have changed their attitude, they pour water in their wine and are much more forgiving towards responsible owners who offer solutions to meet their commitments.
Stay confident, suggest solutions, we’re listening.
tips
- Rethink the planning of your upcoming projects. Sometimes trips and some major expenses can be postponed without causing disaster.
- Can you supplement your income with a part-time job?
- Ask a loved one to come to your temporary aid until the situation returns to normal.
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