If, like over a million Canadians, you are preparing to renew your mortgage this year, here are some suggestions to help you make an informed decision and limit the shock of payment increases. (Of course, this also applies if you are taking out a new loan!)

1- Plan ahead for renewal
It is crucial not to wait until the last minute to renew your mortgage. Start thinking about it four to six months in advance. This gives you time to consider the best ways to mitigate the shock of payment increases.

Even though interest rates have recently dropped, they remain higher than they were before the COVID-19 pandemic. If you find a product with a rate that suits you, lock it in. Financial institutions generally offer to freeze a rate for 90 to 120 days, protecting you from a potential rate increase.

2- Choose between fixed and variable rates
The choice between a fixed or variable rate depends on your lifestyle and risk tolerance. A fixed rate offers the security of a stable payment, while a variable rate can fluctuate based on the Bank of Canada's decisions.

3- Examine other conditions
Don't focus solely on the interest rate. It is crucial to consider penalties, transferability, and prepayment options. For example, the ability to transfer your mortgage to a new property can be very useful if you plan to move before the end of your term.

4-Extend the amortization
If the increase in your mortgage payments is unsustainable, consider spreading your payments over a longer period. This can reduce the amount of your monthly payments, although it means paying more interest in the long term.

5- Consolidate your debts
If you have accumulated consumer debt, it may be wise to integrate it into your mortgage. This allows you to amortize it over a longer period and reduce your monthly payments.

We are here to help
As certified mortgage brokers, we can assist you in the process of renewing your mortgage. Our services are paid for by the lenders, which means you don't have to worry about additional fees. Additionally, changing lenders at renewal can generally be done without administrative fees, giving you more flexibility to find the best option for your needs.