5 ways to reduce mortgage stress

Is mortgage stress keeping you up at night? Use these five tips to gain peace of mind about managing your mortgage and financial stress.

If you're like many homeowners, your mortgage is your biggest financial responsibility. Understandably, the weight of that responsibility can lead to some serious anxiety and stress, and the relief of simplifying just that one aspect of your life is palpable.

Though it may not always feel like it, you're not powerless. In fact, quite the opposite is true! Below are five ways to help make managing mortgage stress a little easier.

What is it specifically about your mortgage that makes you feel anxious? Try to nail it down. Some common worries include:

• Do I have enough money in my account to make a payment?
• How much money am I going to end up paying in interest?
• How will I keep making payments when rates go up?
• If something happens to my partner, how will I pay the mortgage?

Once you can clearly identify what's causing your mortgage anxiety, you can start to take steps to fix it.

If you're concerned you won't be able to cover your mortgage payment, set your payment dates to align with when you get your paycheque. For example, if you're paid biweekly on Thursdays, ask your mortgage lender to take your payments biweekly on Thursdays as well. This helps reduce the chances your mortgage payment will bounce — a problem that could leave you with insufficient fund fees and negatively impact your credit.

Worried about the amount of interest you'll pay on your mortgage over the years? Compound interest (when interest builds on interest) is great when you're receiving it, but it's not so fun when you're paying it. When you pay monthly, you're making 12 payments per year. Switching to biweekly payments means you'll make 26 payments, the equivalent of 13 months of payments. That extra payment goes toward your mortgage principal. Depending on your mortgage amount, you could shave one or more years off of the mortgage this way.

A simple way to help reduce your long-term costs when you can't make extra lump-sum mortgage payments is to switch to accelerated payments, where you'll make slightly higher weekly or bi-weekly payments, but those small increases make a big difference over time.

Fluctuating interest rates are a fact of life. Chances are that at some point during the time you have a mortgage, you'll see rates go both up and down. In fact, Canada is in a rising interest rate environment right now.

If the thought of fluctuating mortgage rates alarms you, consider an early renewal to take advantage of current rates and help reduce your mortgage stress. An early renewal involves arranging to renew your existing mortgage into a new term with a new rate before your current mortgage expires.

You could early renew into a mortgage with the same term you have now, for example three years. Or you could choose a longer-term mortgage, say a five-year mortgage, to give you some peace of mind for a longer time. Weigh this option carefully, though: depending on your mortgage terms and the time left on your current mortgage, you could face a prepayment penalty.

Instead, ask your lender about a blended mortgage, which combines your existing mortgage rate with the current rate and offers you a new rate. A blended mortgage can reduce your existing mortgage rate and may even extend your term to keep that rate longer without a mortgage prepayment penalty.

In some households, couples have a mortgage that neither one of them could pay on their own. Other families might depend on one spouse's income to cover all of their financial obligations. In these situations, the concern over what happens if one spouse can't make payments can lead to major financial stress.

One way to ease tensions is to add an extra layer of security with insurance. If one spouse can't work due to a qualified critical illness, some types of insurance could cover your payments or mortgage balance.

Don't let mortgage stress rob you of enjoying your home, your family, or your life. Take some time to pinpoint your biggest mortgage worry so you can address it with one of these tips, and get back to loving your home.