Here’s a case study that shows why having a mortgage strategy that takes into account your cash flow, current debts, future income and financial goals can make a huge difference to your financial well-being. 

Max’s mortgage renewal letter

Five years ago, Max bought a home with a $500,000 mortgage with a five-year term, beginning with a 25-year amortization. It had a 2.5% fixed interest rate with monthly mortgage payments of $2,240. Over those five years, Max paid off almost $77,000 of the principal amount owing.  

A few months before the five-year term was up, Max received a renewal letter from her lender with this offer:

$423,190 mortgage

Five-year mortgage term at 6.79% interest rate

20-year amortization

$3,204 monthly mortgage payments

When Max read the letter, she was stressed out that her mortgage payments were going to increase by $964 a month. She’s also been worried about her other monthly debt payments, which had also risen over the last year.

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