Ottawa Mortgage Blog

Canadians are currently experiencing the highest mortgage rates in 23 years, all while home prices remain near record highs. This puts considerable pressure on borrowers. If you're feeling the strain or seeking strategic advice, here are five tips to help you maintain financial stability in a high-rate environment:

High mortgage rates will come down. While predicting exact drops and dates is challenging, most experts agree that we will see significant declines over the next 2-3 years. Given this outlook, consider opting for a shorter-term fixed-rate mortgage (2-3 years) or a variable-rate mortgage. These options allow you to take advantage of future lower rates without locking yourself into a long-term commitment.

To keep your mortgage payments more manageable in today's high rate environment, you might consider extending your amortization period. This can be a temporary measure that you take short-term, until rates decrease. Once your mortgage rate drops, you can shorten the amortization by simply maintaining the same payment amount. This flexibility can provide immediate relief without compromising your long-term financial goals.

If you currently own your home and have other debts outside of your mortgage, rising mortgage interest rates can strain your budget. Consider consolidating higher-interest debts into your mortgage. This strategy can save you thousands in interest and simplify your finances by reducing the number of debts you need to manage. It eases the burden, making it easier to focus on your mortgage payments.

If you have some savings, making a lump sum payment on your mortgage can be a smart move. This not only reduces the interest cost of your mortgage at higher rates but also can make your regular payments more comfortable by lowering the principal balance.It's important to note that making a lump sum payment in the middle of your mortgage term will not reduce your regular payment in most cases, but a lump sum payment at near maturity of your mortgage can reduce your payment. Even a modest lump sum payment can have a significant impact over time, so consider using any extra funds to reduce your mortgage burden. 

Navigating a high-interest rate environment can be complex. Working with a knowledgeable mortgage professional can make all the difference. As your mortgage broker, I can help you understand your options, find the best rates and terms, and guide you through the entire process.