Whether you got your mortgage a decade ago or a year ago, it may be the case that you would like to rejig some of your finances, either in order to save more for the future or to cover some short-term shortfalls in the present. Either way, there may be some opportunities to cut your mortgage payments in order to make it happen.
 
  • The most obvious way to cut your monthly payments once you have a mortgage is through refinancing. A refinance is when you essentially renegotiate the terms of your mortgage, including taking advantage of interest rates that were lower than when you got your mortgage. There are fees involved if you do so before the end of your current mortgage term, but it has the possibility to lower your monthly payments for the rest of your term if you get a closed mortgage.
  • If you’ve always had a fixed rate mortgage, look into getting a variable rate when you renew. You know that you pay for the security of a fixed rate mortgage, but since we’re currently walking through the valley of low interest rates, you could be paying less if you had a variable rate, as the chances of rates going up quickly appear to be slim.
  • Change your amortization period. This one is tricky because the longer your loan, the more you pay in interest. But if you need more money on a monthly basis, then lengthening your amortization period can decrease your monthly payments. Once you’re out of the woods and no longer need the extra cash or once you’ve reached your savings goals where you’ve been diverting your money, you can then make prepayments on your mortgage in order to catch up. Just make sure that your lender allows prepayments, and doesn’t penalize you for making them.
  • Contest your property value assessment. Okay, so this isn’t exactly lowering your mortgage payments, but property taxes can be a huge burden on your monthly budget.  Everyone wants the value of their home to increase, but the flip side of that coin is that if your home value increases, so too do your property taxes. If you’ve gotten a property assessment notice and legitimately think it’s incorrect and if you aren’t planning on selling your home in the near future, a lower assessed home value will benefit you more than a higher one.
  • Call your lender. Maybe you’ve lost your job, maybe you are hit with an unexpected tragedy and can’t keep up with your mortgage payments. Don’t ignore the situation and hope that things will get better the next month. Maybe they will, but there’s also a chance that they won’t – and you’ll be yet another month behind. Your lender doesn’t want you to default on the loan any more than you do. It’s a huge hassle for them, not to mention the fact that they may never see the money that they loaned to you. Call your lender and/or work with your mortgage broker to see if you’re allowed to pause your mortgage payments for a certain period of time, or to work out a temporary payment plan with your lender.
  • Sell your home. Radical? Perhaps. But if you house is just too big of a financial commitment for you to make and your monthly payments have gotten to be too big a chunk of your paycheque, cut your losses and put that ‘For Sale’ sign on your lawn before you dig yourself so far into a hole, you can’t get out. You can then buy a smaller home or rent for a while until you get your head above water again. That too, can require a lot of cash upfront – those pesky closing and moving costs, in addition to paying a realtor – but if you don’t see your financial situation turning around then it could still be better for you in the long run. There will always be property to buy when the timing is right for you again.


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