Is mortgage anxiety keeping you awake at night? Use these five tips to help you manage your mortgage and financial pressures.
If you’re like most homeowners, your mortgage is your most significant financial obligation. Understandably, the weight of the burden will cause significant distress and tension, and the relief of simplifying only one part of your life is tangible.
You are not weak, even though it does not always feel that way. In truth, the inverse is real! Here are five suggestions to help you manage mortgage tension.
Ensure all the payments correspond to your paycheque.
Fix the payment times to coincide with when you get your paycheque if you’re worried about not being able to afford your mortgage payment. For example, if you are paying biweekly on Thursdays, request that your mortgage payments be made biweekly on Thursdays as well. This reduces the likelihood that your mortgage payment will bounce, which may result in inadequate fund fees and a negative effect on your credit.
To reduce long-term mortgage rates, make biweekly payments.
Are you concerned about the rate of interest you’ll pay on your mortgage over time? Compound interest (interest that grows on interest) is cool when you get it, so it’s not so much fun when you have to pay it. When you spend on a monthly basis, you make 12 payments per year. When you switch to biweekly installments, you’ll make 26 payments, which is the equivalent of 13 months of payments. The extra charge is applied to the mortgage principal. Depending on the size of your mortgage, you might save one or two years by doing so.
When you can’t afford additional lump-sum mortgage payments, switching to incremental payments, where you’ll make marginally larger monthly or bi-weekly disbursements, but even modest changes add up over time, is an easy way to help reduce the long-term expenses.
Revisit the current mortgage to obtain a cheaper interest rate.
Varying interest rates are an unavoidable fact of life. Odds are, at some point during your mortgage’s term, interest rates will rise and fall. In reality, the world is currently experiencing rising interest rates.
If the prospect of varying mortgage rates makes you nervous, consider renewing your mortgage early to take advantage of existing rates and reduce your mortgage burden. An early renewal is when you arrange to extend your current mortgage for a longer term at a new interest rate until your current mortgage ends.
You could refinance into a mortgage of the same duration as you have now, say three years. You might also go for a fixed-term lease, such as a five-year mortgage, to give you more peace of mind for a longer period of time. However, consider this choice carefully: based on your mortgage terms and the time remaining on your new mortgage, you will face a prepayment charge.
Alternatively, inquire with your lender for a hybrid mortgage, which mixes the old mortgage rate with the current rate and provides you with a new rate. A blended mortgage will lower the current mortgage rate and even stretch your contract to hold the rate for a longer period of time without incurring a mortgage prepayment charge.
Purchase premiums to help offset your expenses.
Other partners have a mortgage that none of them can afford to cover on their own. Other families can rely solely on the income of one spouse to meet all of their financial liabilities. Concerns of what will occur if one partner is unable to afford payments will cause significant financial uncertainty in these circumstances.
Adding an additional layer of coverage with premiums is one way to alleviate pressures. Some forms of insurance can protect the payments or mortgage balance if one partner is unable to function due to an eligible serious illness.
Don’t let mortgage tension keep you from loving your house, family, or life.You can find a mortgage broker to help you identify the main mortgage challenge so you can solve it with one of these solutions and get back to enjoying your house.