The importance of planning
Creating a plan can help keep your interest costs down while paying down your mortgage or home equity line of credit.
By looking at your budget, your savings and your debt, there are a few ways to feel prepared and keep your repayment on track:
- Review your budget to see if you can set money aside to help manage higher mortgage or line of credit payments
- Reallocate part of your savings contributions to your mortgage or home equity line of credit payment
- Speak to an RBC Advisor about ways to lower your debt payments or save on interest costs
Along with your existing mortgage or home equity line of credit payment options, some or all of these ideas may be right for you.
Review and adjust your monthly budget
By taking a closer look at your budget, you may be able to identify areas to trim spending and free up savings every month, which could help manage increases to your mortgage or line of credit payments.
- Use the RBC Create a Budget Calculator to calculate your available cash after expenses
Look for ways to increase your cash flow by:
- Reducing variable and discretionary expenses where possible
- Tapping into alternative sources of income, if available to you
Reallocate part of your savings contributions to your mortgage or home equity line of credit payment
Do you have savings set aside in non-registered accounts (such as a GIC or high interest savings account) or registered accounts (such as a TFSA or RRSP)? If so, you may be able to leverage these savings to ease the impact of higher mortgage or line of credit payments. Consider taking these steps:
- Review any regular savings contributions, optional payroll deductions, or dividend re-investments you make today. If you’re feeling the pinch from higher mortgage or line of credit payments, pausing these temporarily could help to reduce the impact on your cash flow.
- Check the balances of your non-registered and registered savings accounts and determine if they could help cover your higher mortgage or line of credit payments. It’s important to understand if there are tax implications, withdrawal penalties, and consider future needs for these funds before using them. An RBC Advisor can help guide you in this decision.
Speak to an RBC Advisor for options to manage all your debt obligations, lower your regular payments, or save on interest costs
If you’re carrying debt on one or more credit cards, or have outstanding balances on personal loans or lines of credit, you may be able to cut down on the amount you’re paying in interest by consolidating debt into lower-interest accounts.
- Switch balances from higher interest rate accounts (such as a credit card) to a lower interest rate account (such as a low interest credit card or home equity line of credit)
- If you have multiple loans, consider consolidating them into a single loan with a lower monthly payment
- Consider refinancing your mortgage to consolidate existing loans into one payment at the lowest available interest rate
- Determine if extending your amortization period to lower your mortgage payments makes sense for you