Are you a Canadian homeowner with a mortgage renewal on the horizon? High interest rates might have you feeling anxious about your financial outlook. However, several savvy strategies can enhance your cash flow and alleviate financial pressure during these challenging times. From switching your payment frequencies to extending amortization periods and exploring the potential of equity takeouts, we’ve got you covered.
Reconsidering Your Payment Frequencies
The schedule of your mortgage payments can significantly influence your cash flow.
From Accelerated to Regular Bi-Weekly Payments
Most Canadians are familiar with bi-weekly and accelerated bi-weekly payments. The latter entails paying the equivalent of one extra monthly payment per year, which while beneficial in the long term, can strain your monthly budget.
An excellent strategy to improve cash flow is to switch from accelerated to regular bi-weekly payments. This reduces the amount you pay per payment cycle, freeing up some much-needed cash without drastically impacting the total interest paid over the life of your mortgage.
Extending Your Amortization Period
Another effective strategy to enhance cash flow is to increase the amortization period of your mortgage. Although this means paying off your mortgage over a longer duration, it reduces your monthly payments, providing more immediate financial flexibility.
Tapping Into Your Home Equity
If you’ve been consistent with your mortgage payments, you’ve likely accumulated significant equity in your home. During periods of high interest rates, you might consider accessing this equity through a Home Equity Line of Credit (HELOC). A HELOC allows you to borrow against your home’s equity, usually at lower interest rates than other types of loans.
You can use a HELOC for various purposes, including consolidating higher-interest debt, investing in assets that generate income, or making home improvements to boost your property’s value. It’s essential, though, to have a sound repayment strategy to prevent falling into a debt trap.
Seek Professional Advice with Harmer Wealth Management
Navigating mortgage renewals and interest rate hikes can be complex. But with strategic planning and expert guidance, you can successfully manage these challenges and maintain healthy cash flow.
Our experienced Financial Advisors at Harmer Wealth Management can provide you with a comprehensive cash-flow assessment and identify all viable options tailored to your unique financial situation.
Book a consultation today and let’s make informed financial decisions together.