Is your mortgage causing you financial grief? Do you feel as though your monthly mortgage payments are draining your wallet? It could be because your mortgage is too high. On average, if more than 30-32% of your annual income is going towards your mortgage payments, you’re paying too much for your mortgage. But there’s no need to fret because there are other fish in the sea, and by that, I mean you have options.
If you’ve fallen out of love with your mortgage, here’s what you can do.
1. Refinancing your mortgage
There are a number of reasons why you may choose to refinance your mortgage, including:
- To obtain a lower interest rate
- To shorten the term of your mortgage
- To switch to either a variable-rate mortgage or a fixed-rate mortgage
If you notice a drop in interest rates or you’re wondering if you could be paying less interest on your mortgage payments, refinancing is your best option. Refinancing your mortgage works best if you can drop your interest rate by around 1-2%. This may not seem like a big number, but when it comes to your monthly mortgage payments, you will see the difference. You can also see if you can change the length of the term of your mortgage to change the amount you’re paying annually. You’ll need to proceed with caution when changing the length of your term, as you may end up paying more on interest and therefore more overall in the long run if you are not careful.
2. Pay off a lump sum of your mortgage
Sometimes when people are house shopping, they fall in love with a property that’s just a bit out of their price range. It happens. But it’s important to evaluate beforehand if you can truly afford the house without having to break the bank. The reality is it still happens, and if this sounds like your situation, one of your options is to pay off a lump-sum of your mortgage. However, pay close attention to your mortgage contract. In some cases, there’s a penalty fee for paying a lump-sum of your mortgage. This is why it’s crucial before signing on for just any mortgage to review your mortgage options to ensure you have room to make lump sum payments without penalty. An experienced mortgage broker reviewing your mortgage is always a solid investment of time, well worth every minute.
3. Mortgage deferral
If you’ve recently found it difficult to make mortgage payments due to a financial or personal emergency, you also have the option of a mortgage deferral. Mortgage deferrals are an agreement between you and your lender which allows you to delay your mortgage payments for a certain period of time. Again, be very careful about opting for mortgage deferral, because for the period you deferred your payments, you tend to end up paying more later to make up for the missing payments. Extending the lifetime of your mortgage means paying more interest in the long run.
4. Walk away
If you’ve really evaluated it from all angles and possibilities and still are having trouble making your mortgage payments, it might be time to say goodbye and sell your house. Remember, a house is only a house, and your family is what makes it a home. In many cases, it can be hard to walk away due to the countless memories your house may hold. But what is worth more, the financial stability of your family living a happy and less stressful life, or a house? Downsizing into a home that better suits your budget will not only eliminate your stress but, it will give you peace of mind knowing your finances are better aligned to your mortgage payments. And, just because you sell a home today, doesn’t mean you won’t be able to upgrade later in life.
If you are currently having a difficult time affording your monthly mortgage payments and you’re not sure what options would be best for you to pursue, I can help. With my years of experience as a professional mortgage broker and financial advisor, I can show you what all your options are and which will benefit you the most in the long run. If you’re ready to take the stress out of your mortgage, give me a call today at 705-315-0516 to set up a virtual meeting to get to ball rolling.