Master your mortgage

You just got your hands on the coveted home. The housewarming party was a success, the champagne flowed. While you’re celebrating, a beast was sleeping quietly, coiled up in a corner, with eyes half-open. It appears harmless, but if you don’t show it who the master of the house is immediately, the beast could chew up your budget until you end up bankrupt.

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The beast is the mortgage you contracted. We all know that in too many cases, the mortgage takes control of the owner. Defeated, the owner ends up getting rid of the house with a heavy heart.

The Canada Mortgage and Housing Corporation (CMHC), an independent organization that protects homeowners, reminds you that if you want to keep your house for as long as possible, you have to tame your mortgage from the beginning and show it who the master is.

First, you have to make the monthly payment on time. The slightest delay leads to fees and affects your credit rating. If you’re naturally careless, the CMHC suggests that you have the amount automatically deduced from your account each month.

Second, why not deposit the equivalent of three monthly payments in a special account, just in case you run into temporary budget problems one day? This gives you the possibility to get back on your feet without affecting your loan.

Third, if repaying your mortgage uses up so much of your mortgage that your quality of life is affected and you’re afraid that you won’t be able to make the next payment, advise your lender as soon as possible. It will show that you are acting in good faith. Who knows, the lender may be able to propose a solution.

Fourth, the CMHC strongly advises you to keep a monthly budget. You’re absolutely right: it’s easier said than done. If you need a hand, the CHMC gives you access to a worksheet.

The beauty of a monthly budget is that it allows you to plan for all expenses related to your house: mortgage, property tax, home insurance, maintenance costs and repairs.

Fifth, put a fraction of your salary in a special account to deal with the unexpected: emergencies illness, loss of employment. If ever one of these misfortunes arises, you can continue to pay your daily expenses without compromising your mortgage payment.

(Source CMHC)