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(October 18, 2021)

Intro (pre-amble): up to 13:20 mark of podcast (what does transitory inflation mean? | fixed or variable? | how much do you have to earn to buy a single family home in Vancouver and what is the minimum downpayment? | the ultimate solution to Vancouver’s affordability crisis)

Sometimes life presents you with some expensive curve balls and before you know it your monthly budget creeps up and you’re suddenly in a pinch. This happens to Canadians more than you can think and oftentimes the mortgage payment is looked upon as the primary means to bring you back to that financial comfort zone.
Here are 4 ways to get the lowest possible mortgage payment:

Request that your mortgage amortization be increased to its maximum. This can significantly decrease your mortgage payment, but it all depends on how your mortgage was underwritten with the lender it is currently with. For example, your amortization may currently be at 23 years and 8 months, but it possibly may have been underwritten at 30 years. If this is the case, your payment would be eligible for a drastic payment reduction.
Convert all, or a portion of your mortgage into a Home Equity Line of Credit (HELOC). A HELOC payment does not include the principal portion typically associated with a mortgage payment. Therefore, the monthly payment is significantly reduced as it is only the interest portion that is required for payment. For example, for a $500,000 mortgage, the monthly payment for a fixed rate mortgage at 2.19% would amount to a monthly payment of $2,165, whereas for a HELOC, the interest only payment would be $1,230…this is a decrease of about 40%! Although HELOCs only require interest only payments, it is important to point out that unlimited principal payments can be applied to the balance at any time, and without penalty.
Get a variable rate mortgage! It’s not hard to understand that a lower interest rate will yield a lower monthly payment. Lately, the best bang for your buck has been deeply discounted variable rate mortgages. Currently, you can get a variable rate mortgage for as low as 0.99%! So, let’s go back to that $500,000 mortgage and compare a 0.99% variable with a 2.19% 5 year fixed – the reduction in payment isn’t as impactful as increasing your amortization or paying interest only payments with a HELOC, but it still clocks in with a respectable 15% lower payment
Get a Refinance! If you’re looking for a major reset, consider a mortgage refinance. This is especially impactful as it virtually wipes out all of your existing debt payments and consolidates them into your mortgage. For many, a mortgage refinance is a rejuvenating and a life-altering experience. You can literally save thousands of dollars in interest costs and substantially reduce your overall monthly payment burden to a level you may not have even imagined possible.