The glory days are over for Toronto’s housing market
Sales numbers have dropped significantly, homes are sitting on the market far longer, and sellers are letting their homes go for below asking price. It’s quite a change from the bidding wars and quick sales that were taking place not so long ago.
The high interest-rate environment is creating higher borrowing (e.g., mortgage rates) and debt servicing costs for both home- and small-business owners. Even some Canadians with fixed-rate mortgages set to renew have been surprised to find their monthly mortgage payment increasing by hundreds of dollars. This increase in monthly payments has started to wreak havoc on budgets across the country.
Along with new condo developments being put on hold while investors back out to sit on the sidelines, there is a disturbing rise in the number of terminated listings (listings taken off the market). More and more owners are defaulting on their mortgages, leading to an increase in cases of power of sale. This year, as of August 23, in Ontario alone, 1,983 mortgages, or 09% of the total number in the province, were reported to be in arrears.
While you may be able to weather the storm of rising mortgage costs for a short period, you might also be wondering if you can pay your mortgage in the long term. The good news is … you have options.
Tools to weather the storm of rising mortgage rates
Consider these options that may be available to you:
- Short-term mortgage payment deferral: Your lender might agree to pause or suspend your mortgage payments for a certain amount of time.
- Extending the original repayment period (amortization): An extension to your original amortization period can lower monthly mortgage payments.
- Adding any missed payments (arrears) to the mortgage balance: Your lender may agree to add missed payments to your mortgage balance and spread them over the remaining mortgage repayment period.
- Moving from a variable to a fixed interest rate mortgage: If you convert a variable interest rate mortgage to a fixed interest rate mortgage, it can protect you from another sudden interest rate increase, should one occur.
- Special payment arrangement: There may be a special payment arrangement you can make that is unique to your financial situation.
It’s important to take quick action quickly. Contact us!
If you miss several mortgage payments, possession of the mortgaged property goes to the lender. This process, called foreclosure, is among the scariest things that can happen to homeowners and small business owners. It’s important to take action at the first sign of trouble. This gives you the most choices and the least consequences when you compare all of the potential outcomes.
At HNPC, our Toronto Real Estate Law Services Team can provide you with the guidance and tools you need to find a solution for your unique financial situation.