With interest rates now at multi-decade highs, some families are selling their homes to get out from under their mortgages and soaring monthly payments.
After crunching the numbers, James Sloan-Minshull and his husband decided to sell their Langley townhouse and dive back into the rental market.
They purchased their home in 2018 with the dream of owning property, having more space and access to trails and the outdoors.
“At that point, the interest rates were low enough where your mortgage payments were actually lower than your rental payments,” Sloan-Minshull explained.
However, with growing interest rates, owning the home came at a steeper price than they ever imagined, meaning they had to give up a certain quality of life.
“Everything has changed,” Sloan-Minshull said. “The grocery habits, the food my dog eats, the length of distance of which vehicle drives and for how long.”
He said they had a 60 per cent increase in their mortgage payment and with gas prices and groceries on the rise, there is no wiggle room left.
“It gets too much. To be able to afford to eat and pay all of my bills and then on top of that to still have some sort of external social element. Going out for dinner for your friend’s birthday. Buying gifts for friend’s birthdays and holidays – it just wasn’t feasible.”
Sloan-Minshull said they are lucky they are both employed with good incomes but he said their cost of living over the last year has increased about $3,000 additional dollars.
“With vehicles, with gas, with mortgage payments,” he listed. “And then we live in the strata complex. So we’ve got special levies that come out and then you have to borrow to pay those. And at these current lending rates, it’s just paying everybody back.”
The couple has now decided to sell their home and move back into the rental market.
“We were gutted, we were absolutely gutted,” he said.
Angela Calla, mortgage expert and author of The Mortgage Code, told Global News they are not seeing people default on their mortgages at this time.
“People are not looking at renting as much,” she said. “They’re looking at what strategies they can do to either maintain home ownership or where exactly they can own.”
However, Calla added it is a very difficult time for Canadians because experts see another increase in rates on the horizon.
“With one in four mortgage renewals upcoming in the next two years, there’s a modified strategy at renewal time that Canadians are going to be faced with,” she said.
That includes switching lenders to one with a longer amortization period, consolidating debt outside of that mortgage, modifying payment strategies, maybe getting an equity loan, a reverse mortgage if they are over 55 and multigenerational family planning.
Calla said they are also seeing changes such as going down to a one-car household, renting parking or storage areas or selling items they don’t need anymore.
“Everyone’s making the decision that best works for them,” she added. “With the families that are able to downsize and still have a home, they’re redefining what the quality of life means for them. And we all have different things that are important to us. So it’s finding that balance within the strategy that is still going to give you the security that you’re looking for when it comes to having a home.”
For Sloan-Minshull and his family, they are hoping their downsizing has a big up-side.
“We’ll be in a position after we move into this rental from the sale of our house to actually bank money,” he said.
They are hoping a smaller home will bring a greater quality of life.