Page 11 - October 2023 News On 7

TIME TO RENEW YOUR MORTGAGE? HERE ARE 5 THINGS YOU CAN DO
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Submitted by Scott Foster, Financial Advisor, Edward Jones
317 DECLAIR ROAD, MADOC, ON K0K 2K0

In the last two years, the conventional mortgage lending rate for five-year term mortgages rose 77%. According to the
Bank of Canada, the 1.4 million Canadians who got a mortgage in 2020 or 2021 could see their average monthly payment
be 30% or higher within five years. If it's time to renew your mortgage, higher payments could impact your financial
strategy.

Here are five things you may want to consider to help control your payments.
1. Pay a lump sum
Renewing your mortgage may be the best time to make a lump sum payment. Putting down a lump sum at the time of
renewal goes directly toward reducing the principal and typically can be done without incurring any penalties. If you
don't have the cash on-hand, you may want to consider liquidating assets if it makes sense for you. Be aware, though, that
this could mean selling assets at a less-than-optimal time.
2. Are there tax implications?
When you change the frequency of your mortgage payments, you not only change how often you pay, but the amount you
pay toward principal.
If you choose to pay more frequently, more of your payments go toward principal, meaning you'll pay less interest over
the life of the mortgage, and you'll be able to pay it down faster. On the other hand, a less-frequent payment schedule
means you make fewer payments per year, which could enable you to manage your cash flow more easily.
If you choose to pay less frequently, you could choose to make lump sum payments during the year if you find that you
have extra cash. Be sure to read the terms of your mortgage before doing this, as many lenders have limits on how much
extra you can pay per year.
3. Renew for a shorter term
According to the Canadian Mortgage and Housing Corporation (CMHC), more Canadians are choosing shorter-term
fixed-rate mortgages.3 Shorter term rates typically come with higher rates, but the hope of many Canadians is that the
Bank of Canada will choose to lower rates before their next renewal.
4. Extend your amortization
If you increase your amortization, you extend the amount of time you'll be paying down your mortgage, but you'll likely
reduce your payments. This could enable you to have better control over your cashflow, but you'll likely spend longer
paying down your mortgage.

5. Downsize or co-habitate
If you find that you're unable to afford your
mortgage payments, selling and downsizing
for a more affordable home could be an
option to consider. Living with and splitting
payments with a friend or family member
could also enable you to better manage your
payments.

What you do depends entirely on your
unique situation. Before you renew your
mortgage, you should research all of your
options. Talk to me about how the choices
you make could impact your financial
strategy.