Bank of Canada announced to increase its overnight rate by 1% on July 13, 2022. Here are some tips you should know:

What if I have a fixed-rate mortgage?

No changes to your current mortgage.

What if I have a variable mortgage?

1. If you have a variable rate mortgage, no changes in the payment. Only the portion towards principal and the amortization change.

2. If you have an adjustable-rate mortgage, your mortgage payment will adjust accordingly.

How much does this rate hike increase in payment?

Your mortgage payment may increase by about $54 per month per $100K mortgage balance.

How much do I qualify now?

The stress test qualifies for a higher rate either 5.25% or contract rate + 2%. This rate hike of 1% will decrease your borrowing amount by nearly 10%.

Should I still choose a variable mortgage?

Choose a variable mortgage if you prefer the flexibility with the minimum penalty.

Should I still choose a fixed mortgage?

Choose a fixed mortgage if you prefer stability with possibly higher penalty costs.

Should I still be looking to buy a home?

If you are in the market to purchase a home, then the answer is YES. Remember you are buying the home, not the interest rate. Also, higher rates lead to less buyer competition, you may be seeing greater opportunities than before.

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