4 Ways to Survive Higher Interest Rates

Higher interest rates could drive Ontario home buyers to firm up purchase plans earlier than planned. 

On March 2, the Bank of Canada (BoC) increased mortgage rates by .25%, tweaking the threshold for buyers without mortgage preapprovals. It’s the first of up to four rate changes home buyers and owners could see this year.  

What causes high interest rates? The BoC increase is aimed at lowering inflation that breached a 30-year high in January 2022. The federal government hopes to bring the current 5.1% inflation rate down to its target 2%. 

Learning about interest rates

Are Higher Interest Rates Better?

Higher interest rates are better for buyers frustrated by historically low housing inventories in Ontario. The fewer buyers, the less competition. But higher interest rates also affect what property buyers and homeowners with the lowest down payments can afford. 

Here are five ways to survive higher interest rates for Ontario homes and land.

1. Refinance your mortgage and HELOC.

Acting sooner rather than later could get you out of risky territory during higher interest rates. Variable rate mortgages and HELOCs (home equity lines of credit) operate in tandem with higher interest rates from Canada’s central bank. 

Upward spikes in mortgage lenders’ prime rates, the rate they offer their best customers, have an alarming spillover effect. Compare average monthly mortgage payments in Ontario for a $599,999 condo with 20% down. That 25-year, closed variable rate mortgage that cost $1,986.54 monthly at 1.8% is $2,044.16 when you add 0.25%.

How to get a shared family mortgage

While that may seem modest, if BoC overnight lending rates follow their predicted course, by year’s end your monthly payments could go up to $2,162.20 ($175.66 more). That’s just painful.

Add to that fluctuating rates for variable rate HELOCs, and you can see the havoc higher interest rates could play with your monthly budget. You may have to take out a second or private mortgage to tame that HELOC. Read our thoughts on second mortgages and decide for yourself.

2. Get rid of credit card debts.

Consolidate those 29% per annum credit card debts into a single HELOC or consumer loan, or add them (temporarily) to your mortgage. You’ll pay more over time if you amortize short-term debt over the long-term in a mortgage. Reduce your interest expenses by resolving to pay off the credit card portion of your mortgage before the term is up.

When to refinance your mortgage.

3. Retire your student loan.

Student loan payment plans can be generous, but isn’t it time you retired that old debt? Revisit your budget to see if you can make a lump sum payment any time soon, or roll the outstanding amount to consolidate all your debts.

4. Fix your credit score.

Get Equifax to email you a copy of your current credit score. It’s free for the asking. Making monthly payments on time, requesting Equifax update its records, and consolidating debts can all improve your credit score. If you can budget regular payments, get a balance transfer card, and reduce the interest you pay on debt while you chip away at it. 

Are private mortgage interest rates high? 

Connecting with your lawyer

Why You Need a Real Estate Lawyer

Interest rate increases worrying you? Refinance your home with your chosen mortgage lender, then bring your mortgage documents to Axess Law. We liaise with your lender to complete the legal steps required to refinance Ontario homes or land. 

Get a no down mortgage in Ontario when you refinance. 

Mortgage stress tests in Ontario may affect your ability to afford the financing you need to complete a real estate transaction. If getting mortgage financing takes longer than you expected, your Axess Law lawyer negotiates with the seller’s lawyer to extend the completion date. 

We request minor repairs a home inspection report identifies, and advise you who gets the deposit when a deal falls through. Our experienced legal team checks for the required insurance binder, and searches title to your property for financial liens and rights of way that can affect the transfer. We register your new home in your name, and, if desired, your legally married or common law spouse. 

How to qualify for private mortgages

Our licensed legal professionals prepare a final statement of adjustments, and review it with you to explain your closing costs and legal fees. Your bill has no unexpected extras or surprises, just our all-inclusive legal services. 

Flat Rate Legal Fees to Fit Your Budget

For cheap lawyers in Toronto, Greater Toronto Area, or Ottawa, call Axess Law. We refinance existing mortgages for $799.99 and up plus HST, or add a spouse to title to property for $649 plus HST. 

Buying or selling a home doesn’t need to cost a lot. Axess Law can close your real estate transaction, anywhere in Ontario, for just $999 and up plus HST for buyers, or or $799 and up plus HST for sellers.

Try Our Convenient Virtual Real Estate Lawyers

Close real estate transactions virtually with Axess Law’s remote video conferencing services. Our virtual real estate lawyers connect with you by secure, confidential video calling software. Online virtual legal services let you e-sign real estate closing documents without leaving your home or office. If you prefer, drop into any Axess Law office to sign in person. We make meeting closing deadlines easier.

Close real estate deals by videoconference

Book Online or Make Appointments In Person 

Book appointments online, or call our 647-479-0118 lawyer line to ask our staff to assist you. Long distance callers, use our toll free line at 1-877-407-4207

You can access lawyers remotely by online video conference anywhere in Ontario. Axess Law has offices in Greater Toronto Area and Ottawa, and lawyers available 7 days a week, day or evening, at times convenient for you.

Use our onsite parking, or take the bus. Axess Law has easy transit access nearby.