The dreaded duo of inflation and rising interest rates has made its way into all areas of our lives, including our mortgages. Since mortgage payments are typically the biggest household expense, the current trend is a serious threat to the financial health of homeowners across the country.
There are a few ways to stretch your hard-earned dollars to ensure all your expenses are being paid – and maybe even leave you with some extra funds.
Cut down on spending: Take a good look at your spending habits. Are there purchases you can make later, or not at all? Try out other ways to save, such as buying second-hand goods or choosing generic brands instead of more expensive labels. Lowering your TV, internet and phone plans is also an easy fix. Consider making lifestyle changes, like switching to a budget-friendly vehicle or picking up thriftier grocery shopping habits. When you start paring down your spending to only what’s necessary, you’ll have more money for what’s important.
Update your budget: These days, having clarity around your income, budget and expenses is more important than ever. In addition to updating your expense list with ever-rising prices, try to stick to your revised budget as best you can. If you’re a variable-rate borrower with fixed payments, figure out how much you would’ve paid had you chosen a 5-year fixed-rate mortgage at today’s rate. Compare that to what you currently pay and consider saving the difference to prepare for mortgage renewal. To help you make or update your plan, use a budget calculator.
Set up an emergency fund: Protect yourself by setting aside a small amount of money into an emergency fund every month so you’re prepared for potential payment increases at renewal. Take your savings further by putting it into a High Interest Savings Account (HISA) or a Tax-Free Savings Account (TFSA).
Mortgage payment relief: If you’re experiencing temporary financial challenges, a good option that a Laurentian Bank advisor could offer you is a payment vacation. A payment vacation is not payment forgiveness. You’ll have to pay back the amount you capitalize or defer, plus interest. By taking a payment vacation, the total mortgage cost will increase. Your credit score will not be impacted because of this decision.
Fine-tune your financial products: A Laurentian Bank advisor can help you decide which ones are right for you. It might involve switching to a fixed-rate mortgage, refinancing your current mortgage debt or, if possible, extending your remaining amortization or repayment. Learn more about refinancing.
Pay less interest: If you have extra money at the end of the month, use it to pay down your highest-interest debt. If you’ve overspent instead and have trouble making payments, contact an advisor who can help you consolidate your debt into products with lower interest rates. You can also use any additional funds to pay down your mortgage and reduce your balance to a lower payment amount.
For solutions related to financial challenges, reach out to a Laurentian Bank advisor today. They can help you explore your options early, before missing any payments. Because when it comes to navigating these uncertain financial waters, sound advice can make all the difference.
You can visit the Government of Canada website for helpful tips on managing your financial health in challenging times.
Laurentian Bank: Laurentian Bank of Canada.
Some conditions apply to qualify for mortgage relief measures.
The articles on this website are for information purposes only. They do not create any legal or contractual obligation for Laurentian Bank and its subsidiaries.
These articles do not constitute financial, accounting, legal or tax-related advice and should not be used for such purposes. Laurentian Bank and its subsidiaries may not be held liable for any damage you may incur as part of such use. Please contact your advisor or any other independent professionals, who will advise you as needed.
The articles may contain hyperlinks leading to external sites that are not managed by LBC. LBC cannot be held liable for the content of such external sites or the damage that may result from their use.
Prior written consent from the Laurentian Bank of Canada is required for any reproduction, retransmission, publication or other use, in whole or in part, of the contents of this site.