(NC) Interest rates may be low but it’s not advisable to take on more debt, say advisors in this field. The federal government is telling us to get prepared for interest rates to rise again – and that will add extra financial burdens to the household.
For example, on a mortgage of $277,658 with a 3.1% variable interest rate, an increase of 0.5% will increase mortgage payments by $864 per year. If rates go up 1%, that will add $1,740 per year to the payments without paying down any more of the principal.
Working toward clear financials goals and paying down debt now are two ways you can protect yourself against the eventual increase in interest rates. The Financial Consumer Agency of Canada offers a number of tools to help you plan, manage, and reduce your debt at
www.it pays to know.gc.ca. Here are some examples:The Financial Goal Calculator helps you to create a realistic plan to get out of debt, save for retirement, save money for an emergency fund, and more. With the Mortgage Qualifier and Calculator tools, you enter information about the cost of the property you want and the money you have. The tools will show you whether you qualify for a mortgage and will determine your payments.
Source: News Canada