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My mortgage is too expensive – what are my options?

Posted on 9 November 2022

Written by Alan Spergel

For a growing number of Canadians, it is a truth that is a bitter pill to swallow – ‘my mortgage is too expensive’. Yet with a steep growth in the cost of living, and steadily rising interest rates, this is the reality for more and more of our country’s population. In fact, a survey has revealed that over half of Canadians are nervous about affording their mortgage payments as interest rates continue to rise. So, what if my mortgage is too expensive? What can I do if I simply cannot make my mortgage payments in time each month? Thankfully, there are a number of options to take when you are worried about affordability. In this article, we explore what to do if you feel your mortgage is too expensive, and who you can reach out to if you need support.

What to do if your mortgage is too expensive

With rising interest rates, unfortunately many more Canadian homeowners will find that their mortgages are becoming unaffordable. This can be difficult to face, particularly if you are short on cash flow. Thankfully, there are some ways that you can prepare yourself to handle the rising cost of owning a home. First and foremost, you should be upfront in your communications with your lender if you are worried you may not be able to make your payments. They will likely be willing to help you. If you do not, there are consequences for having a missed payment. Here are some of the actions you should take if you begin to struggle to make your mortgage payments.

See if your amortization period can be extended

The monthly mortgage payment you make is determined by a few factors – your downpayment, the length of your mortgage, and your amortization period. If you are able to extend your amortization period, you essentially take longer to pay off your mortgage, which decreases your monthly payments. This can be very helpful when you are struggling to afford your monthly mortgage payments. Whether or not you can increase your amortization period will depend on your lender and your renewal, and how far you are into your amortization period already.

Ask your lender for a mortgage payment deferral

By contacting your lender and letting them know about the struggles you face with your mortgage, they may agree to pause your mortgage payments for a fixed period of time. This could give you some breathing space to pull together the funds needed to continue making your payments.

Consolidate your debts where possible

Having numerous high-interest debts aside from your mortgage can make it more difficult to stay on top of your mortgage payments. By consolidating other debts, your overall interest payments could be reduced. A debt consolidation loan is a great way of reducing or even clearing your interest payments, while simplifying your payments into one. This way, you could have more funds to cover key bills including your mortgage payments.

Avoid high interest loans

Although it can be incredibly tempting to get some fast cash, there are some credit options you should look to avoid. Payday loans have some of the highest interest rates on the market, and although they offer cash quickly, it can be incredibly difficult to repay them. Cash advances can also max out your credit limit quickly, which can have a negative impact on your credit report.

Get a roommate

A great way of generating some additional cash is to boost your cash by taking on a roommate or a tenant. It is an easy and straightforward way to gain additional income, and can fill any spare rooms you may have. These extra funds can go towards covering some or all of your mortgage payments so you do not have to rely on other funds.

Rent out your home, or sell and downsize

If your home and mortgage is simply becoming unaffordable to sustain, although not an easy choice, it may be best to rent it out or sell. This will mean you no longer have to worry about making your mortgage payments, which could be best for your peace of mind. If you decide to sell your home, you may have equity built up which could allow you to pay off your debt and have some funds left over for making a decision on your next steps.

Speak to a Licensed Insolvency Trustee

Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief in Canada. This means they are best placed to advise you on your financial circumstances and how best to tackle your debt by advising you on a form of debt relief. By reducing or clearing other unsecured debts in your life, you can free up funds to more comfortably pay your mortgage. Consumer proposals and filing bankruptcy are two of the most popular forms of debt relief. At Spergel, we have been helping Canadians begin a fresh financial future for over thirty years.

Still worried that ‘my mortgage is too expensive’? At Spergel, we are here to help you if you are feeling the financial pinch and are worried about losing your home. Our experienced Licensed Insolvency Trustees will run you through your options, and review your finances. Together, we will provide guidance on how you can navigate through these tough times. Reach out today and book a free consultation – you owe it to yourself.

Alan Spergel

Alan Spergel

Alan Spergel is the founder and President of Spergel. A leader in our industry, he is also a former chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) and has served on Canada's Superintendent of Bankruptcy Management Board. He actively supports multiple charities, ensuring that Spergel gives back to our communities and has recently been appointed as Chairman of the Board of the Humber River Hospital Foundation. Outside of the boardroom, you can find Alan playing golf, tennis, or skiing and enjoying quality time with his grandchildren.

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