By Thierman Financial

Five Options If You Can’t Manage Your Mortgage Payments

May 1, 2025 | 10:34 AM

The views and opinions expressed in this editorial are those of the writer’s and do not necessarily reflect the views or positions of Pattison Media.

1. Skipped or deferred payments: Some lenders allow you to skip a payment or defer payments temporarily, giving you breathing room to get back on track.
2. Debt consolidation: If you have multiple debts, consolidating them can simplify your payments and potentially reduce your monthly costs.
3. Convert to a fixed-rate mortgage: If you’re on a variable rate and worried about rising interest rates, switching to a fixed-rate mortgage can provide more stability and predictable payments.
4. New payment agreement: Reach out to your lender to negotiate a new payment arrangement that better suits your current financial situation.
5. Extend your amortization period: Extending the length of your mortgage can lower your monthly payments, although you’ll be paying more in interest over time.

Is downsizing an option?

If you truly regret buying your home and feel like you’re drowning in costs, downsizing could be a way out. However, it’s important to consider the costs of moving, including legal fees, realtor commissions and potential renovations to sell your home.

That said, if the numbers work in your favor, downsizing can free up home equity and lower your monthly expenses, helping you regain control of your finances.

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11 ways to avoid becoming house poor

The best way to avoid being house poor is to prevent it from happening in the first place.

By making smart decisions before and during the homebuying process, you can safeguard your finances and maintain a comfortable lifestyle.

Here’s how to avoid falling into the house poor trap:

1.      Create a household budget before you buy

Plan and know exactly how much it costs to move out in Canada. Consider all the expenses involved in homeownership — moving costs, utilities, property taxes and more in your household budget.

2.      Don’t buy more house than you can afford

Stick to the 30% rule and make sure your monthly housing costs don’t exceed 30% of your gross income. Be realistic about what you can comfortably afford.

3.      Buy in an affordable area

Consider purchasing a home in an area where housing costs are more manageable. Many regions in Canada offer affordable housing options that allow for a better quality of life without stretching your budget.

4.      Make a larger down payment if possible

The larger your down payment, the smaller your mortgage. This helps reduce your monthly payments and interest costs, giving you more breathing room in your budget.

5.      Know the condition of the home

Be aware of the quality of the home before you buy. Have a home inspector look for any major repairs that may be needed, such as a leaky roof, aging plumbing or a cracked foundation, which can quickly become expensive problems.

6.      Build up an emergency fund

Before purchasing a home, ensure you have an emergency fund in place to cover unexpected expenses like home repairs, job loss or medical bills.

7.      Minimize lifestyle creep

Avoid the temptation to spend more as you earn more. Just because you have a higher income doesn’t mean you should take on a bigger mortgage or increase your spending on non-essential items.

8.      Prepare for income loss

Plan for potential income changes, such as maternity or paternity leave, or even an unexpected job loss. It’s essential to have a financial cushion to get through these periods without falling behind on housing costs.

9.      Budget for home maintenance

Homes require ongoing upkeep, from routine maintenance to larger repairs. Make sure you budget for these costs, so they don’t catch you off guard.

10.      Save for other life goals

Owning a home shouldn’t mean sacrificing everything else. Continue saving for important areas of your life, like hobbies, vacations and retirement.

11.      Minimize consumer debt

Keep your consumer deb (like credit cards and personal loans) as low as possible to ensure more of your income can go toward your home and other important priorities.

Conclusion

Avoiding the house-poor trap requires careful financial planning, a realistic understanding of what you can afford and sometimes even re-evaluating your values.

It’s important to ask yourself whether homeownership is worth the sacrifices you’re making in other areas of your life.

By sticking to the 30% rule, building an emergency fund, and budgeting for future expenses, you can enjoy homeownership without sacrificing your quality of life. Whether you’re a first-time homebuyer or reconsidering your current mortgage, making smart, informed decisions today — and aligning them with your true priorities — will safeguard your financial future and help you maintain the lifestyle you want.

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