How to Get a Mortgage Refinance Down the Line

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Hi Nicole, I’m starting to worry about all the rumors of official interest rate hikes while so many other household expenses are going up. Our lender passed the entire increase on to our mortgage, raising the rate by 0.25 percentage points, and it is now at 3.21%. We have a loan of $480,000, taken out when we bought our first house four years ago. I would be very grateful for any information on how we can protect ourselves. We both want to go to reduced hours soon, to share custody of our long-awaited little one. Thank you very much Sheree

First, you can do much better than a 3.21% mortgage. That you are on such a rate is a reflection of the fact that you have had the mortgage for four years.

It is becoming increasingly difficult to juggle higher mortgage payments and a rising cost of living.Credit:Michael O’Sullivan

However, the pandemic-induced mortgage rate war has seen much sharper deals hitting the market; so it’s time to refinance – if you can. This would instantly put more money in your pocket to help with the rising cost of living.

It’s good for your mortgage that you haven’t reduced your hours yet, as it will make it easier to get your loan approved. What two regular and reliable income.

The other side of the coin is your expenses.

The so-called “Netflix test” is an in-depth survey of everything you spend in the three months before you apply for a loan. It is therefore preferable to be economically prudent during this period, to show a lender that you have sufficient capacity to make mortgage repayments.

The lender will review your expenses in more than a dozen common categories, including groceries and other household expenses, clothing and personal care, utilities and rates, insurance, transportation costs, telephone, Internet and other media (pay TV, streaming services, etc.), medicine and health, education, recreation, sports and entertainment, and child care.

Your baby plans, although exciting, are expensive…so I’ll keep them quiet!

There is also an amount that is assumed to cost you to live, in your particular situation. This is called the household expenditure measure. However, there is no point in cutting your expenses below that, as a lender would use the higher of the two figures.

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