Mortgage rates are still high: Should you sell or keep your home?

Even though mortgage rates have begun to fall, many homeowners are still feeling the financial pressure. A combination of higher payments and the rising cost of living continues to impact family budgets.

For certain households, this can lead to difficult choices such as delaying a payment, dipping into savings or taking on additional debt to keep pace. These situations can cause anxiety, but there are concrete solutions to help you regain control before you reach your breaking point.

Before making a decision, you must first understand your current financial situation and your options.

Three options to consider depending on your situation

As a homeowner, you have several options when renewing your mortgage.

1. Refinance your mortgage

Refinancing involves renegotiating the conditions of your loan in order to reduce your monthly payments or consolidate your debts. This strategy can reduce your budget in the short term, especially if you extend the term of your loan.

However, extending the repayment period means that you’ll pay more interest in the long term. Before accepting, take the time to fully understand the new conditions and compare several offers.

Refinancing could be a sound solution if:

• You still have a strong ability to pay;
• You’d like to reduce your monthly payments;
• You’d like to regain your financial health without selling.

Refinancing is a way to buy time and get back on track as long as you keep control of your budget.

2. Sell your property

This is a difficult decision, but it’s often the most responsible choice. If your payments have become prohibitive and you can’t see light at the end of the tunnel, selling could help you avoid getting deeper into debt.

• Your payments are becoming unmanageable over the long term and you can’t envisage a sustainable solution to restore your financial balance;
• You have to constantly dip into your savings or take on more debt to cover your monthly payments;
• Based on what you’ve seen on the market, you could sell your home for a good price and find new housing at a lower cost. However, you should bear in mind that the rental market has also become increasingly expensive. Do your research before making a decision!

If any of these situations apply to you, selling your home while its value is high might be the best solution. It would allow you to pay off your debts and start afresh.

3. File a consumer proposal

If you’ve accumulated a lot of debt, a consumer proposal is an excellent alternative to bankruptcy. It’s essentially a formal agreement negotiated with the help of an Insolvency Advisor such as those at Raymond Chabot. It allows you to:

• reduce your total debt;
• make one affordable monthly payment;
• stop interest from accruing and creditors from calling;
• keep your assets (including your home).

Find out more about the differences between bankruptcy and a consumer proposal.

In short, decisions involving your home can be daunting, especially if your financial situation is strained. Naturally, your home is an important asset and we realize it also has sentimental value. However, it’s best to avoid getting deeper into debt rather than keeping your home at all costs.

In all cases, one of our Licensed Insolvency Trustees can help you get a clearer picture and avoid costly errors. This professional will help you to:

• understand your current situation;
• objectively assess each option;
• choose the solution that aligns with your reality.