How to manage your finances amid high mortgage payments
As more and more homeowners face mortgage renewals at surprisingly higher interest rates, some are facing the dreaded prospect of having to sell a home they can no longer afford.
But experts say while that option may be on the table, there are steps financially stretched homeowners can take before putting a “For Sale” sign on their front lawn.
“We need to acknowledge at the start that selling the house might end up being the only option for some homeowners,” said Becky Western-Macfadyen, a financial coaching manager with Credit Canada.
However, homeowners should begin with reworking their family spending, she said, by looking at the money coming in and going out, including frequent expenses on household maintenance, car repairs and medical bills.
The next step would be to gather all potential ideas on paper to find ways of diversifying their income sources. That might mean a second job, asking for a raise at work or renting a room in the house, Western-Macfadyen suggested.
“Be realistic,” she cautioned.
She also warned that in dire cases, drastic measures might be needed to lower spending.
“It’s not the time to focus on cutting out lattes,” she said. “You want to make sure you’re making some big changes and it needs to be sustainable.”
She suggested homeowners put any spare cash toward their current mortgage with a lump-sum payment before it gets renewed at a higher rate to help manage the expected increased monthly payment.
Homeowners can also seek help from a financial adviser or a certified financial planner to gauge what an affordable, yet sustainable, lifestyle could look like, according to Tony Salgado, founder of AMS Wealth.
As the mortgage renewal approaches, don’t assume the first offer presented by a lender is
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