Many islanders, coupled with the highest levels of inflation in 40 years, are trying to deal with mortgage payments that are much higher than expected at higher interest rates than many years.
For those who are about to buy now, or who are approaching a mortgage renewal, there are many options for fixed rates, floating rates, floating fixed rates, and vice versa.
Daryl Murphy, financial adviser to Charlottetown’s Red Oak Financial, said:
But just as car options don’t improve reliability, mortgage options don’t change the core issue. It’s a loan you have to repay.
“It’s always a balance between paying now or later, and how much you need in terms of cash flow now and cash flow to pay later,” Murphy said.
You should shop
There are several ways to spread these payments, but keep in mind that long-term payments will result in lower payments. However, you will pay more interest over the entire term of the loan.
If an update is planned, one of the things you can do is start looking around right now, Murphy says.
“You can buy a mortgage up to six months before the renewal date, so you can look around at different rates,” he said.
“Without penalties, you can break your mortgage up to 6 months ago.”
Renewal time is also an opportunity to pay off some of your loan’s capital. This means paying less interest in the long run, but Murphy said it’s not an option available to everyone. To make that payment, you need to have cash available.
Extend your mortgage
In more dire situations, more serious measures are needed, especially if people have other debts that require payment.
Paul Trainor, a mortgage broker at Atlantic Business Federation in Charlottetown, said:
Refinancing will renegotiate your mortgage and fold other debt into it, guaranteeing the value of your home. Mortgage rates are lower than virtually any other loan available.
It is also possible to extend your mortgage to lower those payments.
“If you have a 15 year mortgage, maybe it’s time to talk to a mortgage broker, Prince Edward Island has a lot of great things, and maybe in extending it to 25 years. Let’s do it, “said the trainer.
Murphy says it’s difficult to give general advice because not only are the individual situations different, but there are also many potential solutions.
Like a trainer, he encourages professional advice.