As more and more homeowners face mortgage renewals at surprisingly higher interest rates, some are facing the dreaded prospect of having to sell a home they can no longer afford.But experts say while that option may be on the table, there are steps financially stretched homeowners can take before putting a “For Sale” sign on their front lawn.
She suggested homeowners put any spare cash toward their current mortgage with a lump-sum payment before it gets renewed at a higher rate to help manage the expected increased monthly payment. Current mortgage rates with traditional banks are north of five per cent, and rates with alternative lenders can be even higher. That compares with mortgage rates below three per cent during the pandemic when the Bank of Canada’s benchmark rate was ultralow.
“When we work with lower-income people with a higher mortgage, they may not come with so many other investment accounts that you could tweak or move around to help offset those costs.” “Mortgage is typically the very last thing that someone would let go,” said Western-Macfadyen. “They probably maxed out their credit cards and lines of credit and at that point, they just don’t see any other alternatives.
As higher interest rates take a toll on housing market activity, it could make it harder for homeowners to get the price they expected from the sale.Talking to a licensed insolvency trustee could also be an option to help alleviate the stress of selling the house and managing debts.
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