With the low lending rates that we all enjoyed for over ten years many of us borrowed to improve our lives. We did renovations, upgraded cars, or bought cottages and rental properties. It was easy to qualify, and it seemed like the banks were giving money away.

Now that the rates are on the rise, and we are being told we may never see them down to the 2% range again – what are we going to do? How can we payoff the toys we splurged on? And, what will we do when our mortgages come up for renewal and we can’t qualify?

This is the new reality for many Canadians who are now coming out of 2.5% mortgages and staring down a new mortgage rate at 6.5%, usually with consumer debt that they want to consolidate.

Many now can’t qualify, so now what?

First we need to stop thinking about the should’of, could’of and would’of decisions that we all made in the past. Believing that your past decisions affect your current emotional state and your future decisions, really has no room in your path out of a financial problem. Instead of beating yourself up about past monetary decisions, figure out the ways to improve your situation. The reality may be that you do need to downsize your lifestyle in order to reduce debt.

Here are some tips that will help:

  1. Earn more income – get a side hustle or part-time job. Why not ask for a promotion or work overtime.
  2. Pull back your amortization on a new mortgage renewal to lower the mortgage payment in order to qualify.
  3. Pay off all consumer credit and close some of your zero balance credit cards.
  4. Pay off lines of credit by selling some of the items that it paid for. For example: down-size your vehicles, sell the
    toys you purchased and look around your home to sell items you don’t use on Etsy, Shopify or Kiijji.
  5. Stop the frivolous spending on meals out and high-cost entertainment experiences.
  6. Ask a parent or trusted family member for help. Agree to a consolidation loan with a family member and setup
    a repayment schedule that you can stick to. Do not tell the bank you have done this when qualifying for your
    new mortgage.
  7. Consider renewing your mortgage with a Credit Union. These financial institutions have lower lending rates and
    are not mandated with the same lending restrictions that the five Big Banks have when qualifying clients. Canadian credit unions are, in my opinion, an option everyone should now consider to receive financial advice, lower rates and help in budgeting/planning for the future.

If you have overspent when the rates were low, you are not alone. Everyone is now feeling the sting of higher interest rates, but it isn’t all bad. House prices will now come down to where they should be, contractors and small business owners will need to get more competitive with their pricing to consumers and Canadians will now have to start planning and creating that budget they have been putting off for the last 10 years.

Owning up to mistakes, and even proudly admitting them, can help you to recognize that regretting a mistake does not need to make you feel ashamed. Mistakes in your past are past, and moving forward while acknowledging them can feel very liberating.

Remember that your future is owned by only you. You are the only one that can choose your outcome. Make a plan, work your plan, change it as needed, and then make sure you retire debt-free and wealthy.


Good Luck & Best Wishes,

ATML – Christine Ibbotson