For many, there’s the question of how to handle the financial shock from much larger mortgage payments, as homeowners renew at significantly higher interest rates. A year and a half into the Bank of Canada’s rate-hiking cycle, that’s become a familiar issue for mortgage holders.
Here are four strategies mortgage brokers are using to help clients as they renegotiate in this tricky environment. If you have no wiggle room, you’ll need to refinance your mortgage to draw out the amortization, replacing your old loan with a new one either at the same or a different lender. This entails some extra costs, including legal fees and an appraisal, which Mr. Tran estimates at roughly between $1,500 and $2,000 in Ontario.
Many borrowers are currently facing a stress-test rate of around 8 per cent, which is a high bar to meet. Homeowners who can’t clear that threshold won’t be able to refinance. But in a quirky side effect of the stress test, lengthening the amortization, which lowers payments, actually makes it easier to qualify, Mr. Laird noted.
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