Kingston Mortgage Solutions provides tips to navigate fluctuating interest rates

*Paid Business Feature*

Let’s face it — 2022 has been a difficult year, especially if you are a first-time homebuyer, or are an existing homeowner with a Variable Rate mortgage trying to navigate the six (so far) rate increases announced by the Bank of Canada. 

For the first-time homebuyer, the recent run-up in mortgage interest rates means that qualifying has become that much harder, thanks to the mortgage stress test, requiring all lenders to qualify you at contract rate + 2.0 per cent! 

With current fixed rates approaching 6 per cent, you have to be able to support Principal and Interest payments based on a qualifying rate approaching 8 per cent! This is proving very difficult for first-time buyers, and more and more are either seeking co-borrowers to help support their application, buying a much more modest home than they had hoped for/needed, or just becoming discouraged and not buying at all. 

Here’s some good news: While high rates and the stress test are the current reality, home prices have been coming down, which means you may need to borrow less, and subsequently qualify for more. This is where your local mortgage broker can assist, by fully understanding your needs, income, and employment type, modelling various scenarios, and determining if a suitable solution is available at one of their many lenders. 

Here’s what you can do: Get pre-approved, and lock in your mortgage rate for up to 120 days. Maximize your savings, avoid unnecessary large ticket item purchases (new car, etc), and be realistic with your choices as you consider your first home. 

For the Variable Rate Mortgage holders, these recent increases in Prime have proved equally difficult, and have unfortunately significantly stretched many households’ finances. While it is hoped that the recent Prime increases will have the desired effect of bringing down inflation, what do you do in the meantime?

Consider preparing a detailed household budget, reviewing all expenditures, and determining where some savings could be had. It’s really back to basics, tightening our belts and reigning in spending. Another strategy is to exercise your prepayment privileges, paying down the principal balance so less interest is collected. Already done that? Your lender may be able to reduce your payments based on prepayments previously made. Again, your Mortgage Broker can help you navigate these options.

There’s no doubt, it’s been a challenging year, but you are not alone. There is help available from dedicated, caring mortgage brokers & agents, and once you know what your options are, this process will become much clearer. 

David Sutherland is the Principal Broker at Kingston Mortgage Solutions.

This article is sponsored by Kingston Mortgage Solutions, who also submitted the content. If you are interested in a Business Feature on Kingstonist, contact [email protected]