In Canada, approximately $352 billion in mortgages are projected to mature in 2025. Many of these will renew at significantly higher rates, which may cause a substantial increase in monthly payments for Canadian homeowners. If you’re among those renewing, now is the time to take action to minimize payment increases, balance your budget, and find a solution that fits your needs.
Here’s how to get started:
Start Planning Early
- Contact your lender 6–12 months before your mortgage term ends to learn about your renewal options and check if early renewal is an option without penalty.
- Compare rates and terms with other lenders to see if you qualify for a better deal by switching.
Consider Shorter Terms for Flexibility
- Locking into a shorter renewal term, such as 1–3 years, may help avoid higher rates for too long. If you’re uncertain about future plans, or if you may sell, a shorter term could prevent costly penalties.
Choose Between Fixed and Variable Rates with Caution
- Fixed rates provide stability, helpful if you need consistent payments. Variable rates may go down if interest rates decrease but remember, they can also rise. Make sure your budget could handle potential rate hikes over the term.
Adjust Your Budget to Prepare for Higher Payments
- Review non-essential expenses and start saving now to accommodate a possible increase in mortgage payments. Building an emergency fund can also provide a buffer if rates rise or unexpected expenses arise.
- Look for ways to increase your cash flow.
Consider Extending Your Amortization Period
- If payments are too high, ask your lender if you can extend your amortization period (e.g., from 20 to 25 years). While this increases overall interest, it can help ease your cash flow in the short term.
Seek Professional, Trustworthy Advice
- Consulting a knowledgeable professional can be invaluable. Find someone who prioritizes your best interests and provides honest advice, not just a sales pitch.
Facing a mortgage renewal in 2025 will be challenging, but by reviewing all your options and developing a solid plan, you can make the transition smoother.
With over 25 years of experience as a Mortgage Broker, I’m here to help navigate the renewal process and ensure you’re prepared for what lies ahead. Reach out if I can assist in any way.
Call or text Andy at: 289-400-3420 or email him at: <http://www.privatedaddy.com/?q=YG5BZ0JAS0RtLyt7TVl6IhdaKkNUTHFycg-3D-3D_19>.