Is Your Budget Ready for Higher Mortgage Rates?
Tips to prepare your personal budget for increased housing costs
By Carmen Chan
If you’re a Canadian homeowner, you might be wondering if your budget is ready for higher mortgage rates. If the idea of renewing your mortgage has you stressed, you’re certainly not alone. According to data from the Canadian Mortgage and Housing Corporation (CMHC), 2.2 million mortgages — 45% of outstanding mortgages — will be up for renewal in 2024 and 2025. But don’t worry, by proactively adjusting your budget, you can navigate these changes with confidence. Here are some tips to get your budget ready for higher mortgage rates.
1. Understand Your New Mortgage Rate
Before making any adjustments to your budget, it’s essential to understand how your new mortgage rate will impact your monthly payments. You can start by requesting a mortgage renewal statement from your lender or broker and making an appointment to speak with them about the changes.
In the meantime, you can also quickly and easily estimate your new monthly payments with an online mortgage calculator. Make sure you ask about any additional fees or changes in terms, so you can calculate that into your adjusted budget. Knowledge is power and this kind of research is a good way to get a clear picture of the new rate and how it will affect your mortgage payments.
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2. Reassess Your Financial Situation
If you haven’t already done so, reassess your financial situation. Mortgage renewal time is a good reminder to check in with your finances and make any needed adjustments. Unsurprisingly, a higher mortgage payment will mean a tighter budget. To make sure you’re prepared, take stock of your income, expenses, and any existing debts. You can also look at possible areas you can cut back on or ways to increase income and help boost your revised budget.
How to Protect Yourself From Rising Interest Rates
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