On December 7th, the Bank of Canada announced yet another interest rate hike in its ongoing fight to tame the rate of inflation, with an increase of 0.5%. With grocery and gas prices also on the rise, and holiday spending already underway, many Canadians are wondering how to stay on track. Here’s the good news: your advisors are on standby to help. Whether you’re struggling to keep a little leftover each month, or you’re just trying to make ends meet, the easiest way to find answers to your biggest financial questions is to ask an advisor. No matter where you are on your financial journey, there are 3 major benefits to proactively talking to your advisor about your mortgage, sooner rather than later.
Peace of mind knowing where you stand.
It’s no surprise that everyday Canadians are feeling the squeeze of inflation on their day-to-day budgets, but when you proactively speak to your advisor about your money, they can help you take an honest look at your financial situation and help you carve out a path forward that makes sense for you.
In fact, a 2022 study* conducted by Ipsos-Reid published earlier this month states that confidence levels of Canadians who work with a financial advisor are nearly 30% higher than those who don’t, “reflecting the important role professional advice […] can play during times of economic uncertainty.*”[* IG Financial Confidence Index]
“Canadians are trying to make sense of what’s happening around them and how it could potentially impact their personal situation, so it makes sense that those who have access to professional advice are feeling more confident,” says Damon Murchison, President and CEO of IG Wealth Management–the publisher of the Ipsos Reid study. “People who work with an advisor tend to feel more financially confident, and report better outcomes when it comes to their ability to save, and even in their ability to enjoy life because they’re worrying less about their finances.”
You gain more control over your financial decisions.
As the Bank of Canada tries to fight the rate of inflation by raising their overnight interest rate, knowing in advance how much you might have to pay when you renew your mortgage can help you start budgeting ahead of time. This gives you control over your financial decisions, by keeping you informed and knowledgeable about the ways major economic trends will affect your budget.
Consider the following example. Five years ago, if you made a down payment of 10% on $500,000 home and entered a fixed-rate mortgage term at 2.69% for 5 years, your monthly payments would have amounted to roughly $2,122. In today’s interest rate environment, you might be looking at an increase on payments of $445 per month – a 21% increase since 2017.
That’d be quite a shock, if you didn’t see it coming. But by proactively discussing your finances with an advisor, you can anticipate changes like these and figure out how they can fit into your budget, so you’re not scrambling to adjust at the last minute.
You get to see the big picture.
A proactive conversation with your advisor will not only help you better understand significant unanticipated costs associated with inflation and interest rate increases, but it can also show you they impact other aspects of your finances, including your savings, investments, and debts.
It’s important to look at the ways rate increases impact your other financial goals. Despite growing concerns about the rising costs of homeownership, a recent survey shows only 39% of Canadians include mortgage payments in their monthly budgets. What makes this finding especially concerning is that mortgage payments make up as much as 35% of monthly expenses for Canadians who have them.
Whether they’re on your monthly budget or not, your mortgage payments could be making an enormous impact on your budget and other financial goals. Proactively speaking with your financial advisor can help you understand the bigger picture, so you can stay on track with all your financial plans, not just your mortgage.
We’re here to help.
Proactively speaking with your advisor about your unique situation helps you gain confidence in your plans, gives you more control over your money decisions, and helps you see the bigger financial picture. Get the conversation started when you book an appointment online here or call us at 1.888.517.7749.