Bought a house within the last 3 years? – What to do now to keep it!
For 14 years until 2022, Canadians enjoyed low interest rates and if you owned a house, it rapidly gained value. Facing a combination of higher living costs and rising debt payments, home-owning young families are the demographic with the most money stress today. Falling home prices could mean you may owe more on your mortgage than your home is worth, in other words, negative equity.
Many young homeowners are experiencing a rising rate environment coupled with falling home prices and 8.1-per-cent inflation rate reported for June,2022.
For relatively new homeowners under much pressure from rising mortgage costs and inflation we recommend:
· Consider renting out a portion of the home.
· Ask your mortgage broker to restructure your debt.
· Reduce to one vehicle from two in your family to save on monthly car/lease payments, insurance, licensing, and maintenance. Or eliminate all vehicles and use public transit.
· Stop, in 2022, contributions to tax-free savings accounts or registered retirement plans.
· Talk to your mortgage broker about available payment deferrals with your lender or refinancing to extend your amortization and thereby decreasing your monthly payments, and move to monthly payments from accelerated biweekly. And yes, all these options will result in paying your mortgage off later than expected.
· Eliminate your cable, landscaping or lawn maintenance, magazine and newspaper subscriptions, gym memberships and home phone costs and other discretionary spending.
· Make all meals at home and reduce entertainment costs.
· Ask for a raise in salary or hourly wage where you work or consider switching jobs or starting a side hustle.
· Review or create a home budget. Go shopping with a list and stick to it and shop where rewards are available.
Home ownership is costly: yearly maintenance, home insurance, utility costs, property taxes and many other non-discretionary costs, furniture and appliance purchases, renovation costs and so much more.
Do what you have to survive in 2022, don’t miss your mortgage payments unless your mortgage broker has worked out a deferral plan for you to do so. Your mortgage broker is here to help!