Higher rates and prices are hitting Canadian homeowners in the (mortgage) pocketbook. Whether you’re trying to afford a home or stressing over your monthly budget, here are some money-saving strategies to work your mortgage to the max.
Put down a lump sum now
Want to get ahead of higher rates? If you’re sitting on pandemic savings, think about spending it on your future self by plunking it down on your principal (hopefully, you have the flexible options to allow it).
You could save thousands on interest costs and help provide a buffer against future rate hikes.
Save more with a conventional mortgage
If you have money put away, consider adding it to increase your down payment to 20% of the home’s purchase price. You’ll save on insurance premiums and have a lower mortgage amount to save thousands over your first 5-year term and the life of your mortgage.
Change your amortization or payment frequency
Extending your amortization (if you’re a few years in or have a conventional mortgage) can help lower your monthly payments to create budget space right now to meet other expenses. This convenience means you’ll pay more interest stretched over the life of your mortgage, but with the option to catch up again later.
Some homeowners are doing the opposite — shortening their amortization to end their mortgage commitment sooner and save a ton on interest. Or upping payment amounts or frequency (for example, from a monthly to an accelerated bi-weekly payment) to get more down on the principal and help ease the hit of potentially higher rates when it’s time to renew.
Save with a lower rate, or switch to a better one
Getting your best, lowest rate (for which you qualify) is a great way to save thousands.
If you're buying a home and go straight to your bank, you'll likely pay a higher rate because they 'bank' on your loyalty rather than compete strongly on rates. A trusted brokerage, like True North Mortgage (offering salaried brokers, an easy online experience and store locations), can pass along a volume discount for a lower rate. If you’re house hunting now, they can hold your best rate to help protect against increases in the short term.
And if you initially got a higher rate with your bank and a broker can find a lower one with a better mortgage fit, a switch may help you save. Another option is moving from a higher fixed rate to a (currently) lower variable one. However, there are risks to consider, in addition to more hikes on the way (tied to Bank of Canada increases).
Tap home equity for lower-interest funds
Maybe you need funds for home upgrades, higher education, or to clear higher-interest debt? Even with rising rates, your mortgage is still a lower-interest way to borrow compared to credit cards or private loans. If you have equity in your home, an expert broker can look into whether a refinance or adding a HELOC will help you save more.
Co-live to co-mortgage
To bring home affordability within reach sooner than going it on your own, consider multigenerational or co-ownership of a larger home with family or friends. You'll be able to pool your resources for a bigger down payment and split other costs, including the mortgage payments.
There are qualification details to consider that a knowledgeable broker can help outline.
Access first-time home buyer programs and rebates
Every potential first-time buyer should talk to an experienced broker.
A True North broker is highly trained, with hours and hours put in on top of what they already bring to the table in knowledge and experience. Along with offering a volume rate discount and flexible mortgage options, they can provide targeted advice on rebates and programs to help turn a first-time mortgage into a sound financial strategy.
Chase down your mortgage savings
Better than a big bank or an ‘online transaction’ platform, a highly trained broker will chase down your best rate and personalized mortgage fit to save you thousands.
Now’s the time to look into whether your mortgage needs fine-tuning to create the budget relief you need.
At True North Mortgage, their expert brokers are real people who care. They’re standing by to provide you with the best service in the industry, at no cost or obligation. Visit their website or apply now.
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