As the Bank of Canada continues their assault on variable interest rate products such as mortgages, credit cards, and lines-of-credit, I’m often asked what can be done to combat rising costs. Usually people are focused on their mortgage payment as it is most often the largest single payment, but in most cases, they are neglecting to consider other more expensive and impactful factors influencing their overall financial health.
What I always remind them of, is that even though mortgage rates are on the rise, mortgages remain one of the lowest costs of borrowing money around. Credit cards are north of 20%, lines-of-credit are prime + 0.50% (or more), and even financing for a car is approaching 10% on some vehicles. If you have any other form of debt or a large upcoming expense, there may be value in refinancing to consolidate debt or pullout equity at a lower interest rate to free up cash. This action can have a dramatic impact on your cash flow position and ease the pressures being felt by rising mortgage payments.
Rising rates will not be here for ever so looking for ways to weather the storm can make a big difference as get through this phase together.
If you have any questions or would like to discuss options to improve your monthly cash flow position, please don’t hesitate to give me a call or shoot me a message – I’m here to help.
Trevor