• Prepare For Larger Payments As Your Mortgage Renews

    As a mortgage broker for over 30 years we are always asked how is business. This year transactions have been really slowed. With high home prices and the highest mortgage rates in 40 years, it is realistic to determine that affordability has become the main problem. What has increased are the calls we are taking for mortgage renewals. Our clients are telling us the renewal payments are causing mortgage shock, and creating great inner stress. Today, we would like to discuss mortgage renewals and how to prepare.

    Before we begin, let’s take an example of a mortgage renewing.

    Current mortgage: $400,000

    Maturing rate: 2.75%

    Amortization: 20 years 

    Principal and interest payment: $2165/mth

    Fixed renewal rate: 5.5%

    New principal and interest payment: $2737/mth (26% increase)

    Variable renewal rate: 6.5%

    New principal and interest payment: $2962/mth (37% increase)

    Ouch!

    How To Prepare For Your Mortgage Renewal

    If you read our updates, you will know that we [Robert Floris & Sean Howard] believe a recession is coming. So far, we have been proven wrong but nonetheless, we have been preparing. We hope our mortgage clients will do the same.

    1. Visit A Professional

    Go visit your bank or mortgage broker to identify the exact maturity. Ask them to project what the new payment might be. Ask yourself and your family how this money may be made up. There are only two ways: increasing your revenue or decreasing spending. Decreased spending involves sacrifices, which can include savings, retirement trips and entertainment. The difficult decisions should be thought well.

    2. Increase The Amortization

    We had a professional healthcare worker who was getting close to 61 years of age. Her mortgage recently came due. She now Willys paying her mortgage off is not one of her goals. She stretched her mortgage back to the original amortization to make her payments as cheap as possible. Many financial institutions will stretch the amortization or let you back to the original amortization. It is important to ask these questions to better understand your mortgage options.

    3. Can You Refinance?

    Many of our clients have outside debts. We are currently doing a refinance for a family where the total cost of the refinance will improve the cash flow as to where they are currently. Evaluate your personal situation.

    As many mortgages renew between now in 2026, start learning and deciding what areas in your financial life you can mitigate to absorb the higher payments coming.

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