Update the mortgage? Canadian Guide

For those in positions, and those whose mortgages are due within the next 12 months, it is best to enter the renewal process and understand the terms and options you will face. Knowing what you’re doing beforehand may cause some sting to disappear from the “rate shock.” Depending on the services provided by your current lender and others, renewing it may even make sense before your old mortgage expires.

Calculate your mortgage renewal

Use the Moneysense mortgage renewal calculator to find out what you will pay after renewal. This tool allows you to play with variables such as location, loan amount, mortgage term, amortization and payment frequency to help find the loan terms that suit you. If your current lender has expanded the proposed renewal terms, you can determine if they are competitive or should be considered for shopping. You can even add related expenses, such as property taxes and utility expenses, to calculate the total cost of your future home ownership.

Should you change the mortgage terms and conditions?

Worrying that you’ll be upset by what looks like an expensive mortgage in the next five years? If you are confident that interest rates will continue to fall, you can reduce the duration of your mortgage to three years, two years (only six months). (Instead, you may conclude that you don’t want to go through this often stressful process anytime soon.

Alternatively, you might consider switching to a variable or floating rate mortgage. This way, whether it’s a fixed or variable payment, you’ll always pay the competitive interest rate. But be aware that even fixed payments may rise if fixed payments reach a preset trigger rate. We have already attributed the arguments of some of Canada’s knowledgeable mortgage thinking to fixed-rate loans and variable-rate loans.

hCope with higher payments

Regardless of the form of your new mortgage, you will almost certainly have more mortgages than you would have registered in 2019 or 2020. We have compiled a list of strategies to manage higher borrowing costs (and no home loss) from advance payments if possible to extend your amortization period. You can’t ignore the rest of your financial situation either; you may have to cut your disposable expenses, consolidate your other debts, or reduce your savings and investments to get your household cash flow on a sustainable trajectory.

Compare the current rates in the table below. Just change the first variable to “Update”, and other variables that suit your situation.

What if you hit a wall?

For some homeowners, lenders are reluctant to renew their mortgage at any price. Your bank may simply refuse the mortgage renewal application after a higher interest rate environment or a troubled mortgage period. Knowing that it’s very far from the end of the road. This article on what to do when refusing to renew also explains how to try to find a new, willing lender: sell a home before resorting to the final solution to the trauma of mortgage renewal.

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About Michael McCullough

Michael is a financial writer and editor at Duncan, British Columbia. He was formerly a former director editor of Canadian Business and editorial director of Canadian broad media. He also writes for the earth and mail and bcbusiness.