Solution 4: Review your budget
For several years, applications for mortgage financing have been subject to a resistance test. When you got your loan, the lender calculated that you were able to pay the higher rate between 5.25% and the rate you had negotiated plus 2%. In theory, if your finances haven’t changed since signing, you should already have enough wiggle room with your current income.
But, as Philippe Limoges Ratté points out, “if borrowers have changed their lifestyle since qualifying and are left with a higher vehicle payment, another child, full credit cards due to unplanned renovations , they may no longer qualify for the same amount of mortgage”.
The low rates of the past two years may have influenced how you manage your budget and allowed you to spend more in other categories. Should we say goodbye to the boat? Limit online shopping and postpone travel (further)? That said, l’inflation also affects your ability to make budget cuts, as even food prices increase dramatically. A complete budget exercise will give you the true picture of the latitude you have.
Whichever solution interests you more, you should contact your broker or lending institution to compare the different scenarios and their impact on your budget.