Your property at risk from rising interest rates

Your property at risk from rising interest rates

Rising mortgage interest rates hurt everyone. Louise and Julien are no exception and fear that they will not be able to maintain the family residence.

The couple purchased their home in the summer of 2021 for $440,000. They were able to make a good down payment and their mortgage is now $401,000.

Yes, but here it is: like many other people at the time, they opted for the variable rate which was then extremely low.

They were far from suspecting that the situation would change radically the following year.

explosive expenses

Initially, her monthly payments were $1,650. With the new interest rate applicable to their loan, they now have to pay $2,250. Worse yet, your payback period has gone from 22 to 40 years!

They are extremely discouraged, as they had calculated that they would have finished paying off their mortgage by the time Louise retires.

Your budget is already tight.

With two children in high school in sports studies programs, they must pay additional tuition fees of $7,700 a year.

“And with the increase in the cost of groceries, our food budget increased to $1,450 per month! “Sorry Louise.

In addition, the debts related to two credit cards, a personal loan and a line of credit, for a total of $45,800, weigh heavily on the household’s finances, which must make minimum monthly payments of $1,240 to pay them off.

  • Listen to Marie Montpetit’s interview with Fabien Major, financial planner, wealth management advisor and author via QUB-radius :

too much debt

Unable to cover all these expenses due to the sharp increase in their monthly mortgage payment, Louise and Julien went to consult insolvency experts.

“We made an inventory of your debts and analyzed your budget. We found there are few to no places to cut as they don’t travel, rarely go to restaurants, and don’t have non-essentials like a trailer, ATV, etc. They don’t go too far: they dedicate all their money to children, sports and family”, says Pierre Fortin, authorized bankruptcy trustee and president of Jean Fortin & Associés.

To keep their home, they have to make mortgage payments of $2,250, and given the weight of their non-mortgage debt, their situation is deteriorating rapidly.

“A debt consolidation is excluded due to its level of indebtedness that goes well beyond 40%. So we suggest other options. After careful consideration, they chose the consumer proposition”, explains administrator Pierre Fortin.

Since the house represented little equity, the difference between the net realizable value less fees and the mortgage, the creditors agreed to $24,000 in 60 installments of $400 per month, interest free.

“To determine if the amount offered in a consumer proposal is reasonable and has a good chance of being accepted by creditors, the trustee considers the net realizable value of the assets, less expenses, and the person’s income,” says Pierre Fort.

From now on, Louise and Julien will be able to sleep peacefully and, above all, keep the family at home.


  • If you have a fixed rate, check the due date of your mortgage. If it occurs in the next year, calculate your new payment assuming a rate of 6.5%. This will give you an idea of ​​the mortgage payment you may have to pay at renewal.
  • If you have a variable rate with fixed payments, make sure your payment covers at least the interest charges. Otherwise, your mortgage balance will go up instead of down.
  • Calculate your level of debt ( to find out where you are on the debt scale. Since this ratio takes into account the amount of your mortgage payment, your debt ratio is or will be, at the time of your mortgage renewal, higher even if your debts have not increased.
  • Quite often, non-mortgage debts (cards, lines and personal loans) are a burden that prevents you from keeping your home. However, when this does not represent too great a weight on a budget, savings must be made at all costs. Therefore, we must work to reduce the amount of other debts.

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