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(November 6, 2022)

Mortgage rates have skyrocketed, inflation has soared and Canadians far and wide are finding it more and more challenging to keep up with their payments.

But fear not, and remember where there’s a will, there’s a way!

Here are some effective mortgage hacks to help you ease the shock of a higher interest rate mortgages:

REQUEST that your lender increase your amortization to its start point

For most mortgage holders this will likely be the least impact strategy when it comes to lowering your payment. Nonetheless, it is a starting point and for some, it may very well be the difference maker when it comes to reducing your payment. This strategy is a fairly easy ask to your lender and should not require any additional qualification hurdles. Simply ask your current lender to increase your amortization to its original time horizon and see what they come back with. If the result does not bring you any meaningful relief, then call Marko Gelo and explore the remaining options below.

Increase your amortization to its original schedule at RENEWAL

This method is like an enhanced version of the aforementioned strategy. Depending on the current terms of your mortgage and how/when it was initially structured, you could potentially proceed as follows:

seek out the marketplace for the best possible rate and term,
reset your mortgage to a 25 year amortization, and
consolidate existing debt

Increase your amortization to the maximum 30 year schedule via REFINANCE

This is where you really start to feel relief. In this arena you can extend your amortization out to 30 years and likely experience no shock from your existing historic low interest rate to today’s new normal rates. Consider a 5 year fixed mortgage of $500,000 with a $2,338 monthly payment coming due and your current interest rate is 2.89%. For a standard renewal, you would maintain your existing amortization schedule and your monthly payment would adjust accordingly (as per your new renewal rate). For example, lets say your mortgage comes up for renewal and the prevailing renewal rate offered to you by your existing lender is a 5 yr fixed rate at 5.44%. If you simply chose to sign on the dotted line and renew with your existing lender your payment would increase to $2,905 per month (that’s an increase of $567/month). But if you refinance to the maximum allowable 30 year amortization, your payment would increase by a mere $50 to $2,358 per month! Albeit, you will be on an extended horizon path to pay down your mortgage (30 years instead of 20), but you will certainly have plenty of opportunity to get back on track with your original 20 year pathway when the timing is right for you. Almost all mortgages allow you to increase your payments and contribute lump sums towards your principle at any time throughout the term of your mortgage, thus allowing you to quickly get back on track and decrease your amortization schedule.

Increase your amortization to 30 years via REFINANCE and CONSOLIDATE any existing debt you have

This is the mothership of all payment reduction strategies. In addition to refinancing your mortgage to 30 years, if your equity ratio allows, you can also consolidate your additional debt to further decrease your overall household debt. In this arena we go from decreasing your mortgage payment to decreasing your overall household debt payment. For example, let’s say that in addition to your $500,000 mortgage, you also have an extra $30,000 of other debt that demands an extra $900/month to service bringing your overall household monthly payment to $3,238. If you renewed with your lender at todays prevailing rate of 5.44% and maintained the current amortization of 20 years, your overall household debt would increase to $3,805/month (an increase of $567/month), but if you refinance to 30 years and increased your mortgage by $30,000 to consolidate the debt, your payment would decrease to $2,555/month…a savings of $1,250/month!

Wondering if any of the above strategies can apply to you? Call or text Marko Gelo directly at 604-800-9593 cell/text, or schedule a phone call in the future with Marko at your convenience.

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