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Managing your mortgage in a high interest environment

1024 683 Nisha Muire

Mortgage interest rates have risen dramatically over the past year. Although there has been a pause in increases, there is no guarantee that rates will not continue to rise. If your mortgage is coming up for renewal and the higher rates are a worry, there are a few ways to mitigate the pressure a higher payment can cause. 

Opt for a fixed rate mortgage

If you are still on a variable rate mortgage, try to lock in – even if it’s just for one year. Having a steady payment will help you to better manage your budget month-to-month. Although the payment will be high, you won’t have to worry about the effects of another rate hike. You can always renegotiate once rates being to edge down.

Increase your payment immediately 

If you know that your payment is going to increase when your mortgage comes up for renewal, a good rule of thumb is to roughly calculate what your new payments will be and begin paying that amount right away if you can. Doing so has two advantages:

  1. The increased payments will bring your mortgage down faster so that when it is time to renew your mortgage, you are renewing on a lower mortgage amount. 
  2. You are able to see how comfortable or not you are paying the higher amount and it gives you a chance to adjust what you need immediately instead of when you have no choice. 

Opt for a longer amortization

If the new payment you are looking at is not sustainable, your best option is to ask for a longer amortization. Paying down your mortgage over a longer time will make your monthly payments more affordable. Once rates start coming down, you can then negotiate your loan and decrease your amortization. Or, if your budget increases, you can always opt to pay down more per month to decrease your amortization. 

Ask your lender for a better rate

Don’t feel shy about asking your lender to give you a better rate. Most lenders are open to negotiation as they have a vested interest in getting their money repaid as well. Having people default on their loans because the payments are too high is not good business for them either.  

Consolidate your loans

If you have a number of high interest loans or credit cards, consolidate them all so that you have only one payment to make instead of several. 

Rent out a room

If your mortgage as increased by too much and you have the room, consider renting out a room to help defray the added costs. 


The last resort is to sell your home and rent. While no one really wants to do this, if you are unable to manage your payments, it might be the best option to avoid insolvency. 

High interest rates are not easy to navigate, but by adjusting your budget and using some of the techniques above, you can weather the storm.


Nisha Muire

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