Is your budget prepared for higher mortgage rates?
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If you are a Canadian homeowner, you might be wondering in case your budget is prepared for higher mortgage rates. If the considered extending your mortgage is causing you stress, you are definitely not alone. According to the Canadian Mortgage and Housing Corporation (CMHC), 2.2 million mortgages – 45% of outstanding mortgages – are up for renewal in 2024 and 2025. But don’t be concerned, by proactively adjusting your budget you’ll be able to handle these changes with confidence. Here are some suggestions to organize your budget for higher mortgage rates.
1. Understand your latest mortgage rate
Before making any adjustments to your budget, it is important to know how your latest mortgage rate will affect your monthly payments. You can first request a mortgage extension explanation out of your lender or broker and make an appointment to debate the changes.
In the meantime, you may as well quickly and simply estimate your latest monthly payments with one Online mortgage calculator. Be sure to ask about any additional fees or changes to terms so you’ll be able to factor them into your adjusted budget. Knowledge is power and one of these research is a terrific solution to get a transparent picture of the brand new rate of interest and its impact in your mortgage payments.
What happens to mortgage rates if rates of interest go up?
2. Re-evaluate your financial situation
If you have not already, reevaluate your financial situation. The timing of your mortgage extension is a very good reminder to review your funds and make any mandatory adjustments. Not surprisingly, the next mortgage payment means a tighter budget. To ensure that you are prepared, take inventory of your income, expenses, and any existing debts. You may also have a look at possible areas where you’ll be able to make cuts or increase your income to complement your revised budget.
This is the way you protect yourself from rising rates of interest
