Canada's major financial institutions raised mortgage rates between 0.25 and 0.30 per cent last week. The new six-month open and five-year closed mortgage rates will be 8.0 and 8.55 percent, respectively.

Although bank executives from the big banks have been quoted as saying the rate hikes will not slow the housing market, rising consumer debt may cause some home buyers and homeowners to rethink their plans. Bankers believe strong job markets and a stronger economy will keep consumers spending on mortgages, especially if they fear rates may rise even higher.

The most important step in making sound investments in your home is to stop reacting to media hype and sales pitches from the financial industry. Get the facts. Make sure you buy when you are financially ready and buy what you really need. Getting caught up in a "my gosh rates are rising" frenzy may be expensive in a number of ways: taking on more mortgage than you need to buy more house than you need in an area that does not achieve the gain in value you need to move ahead financially.

As well as looking at monthly affordability take a long look at what borrowing that money for one, two or five years will really cost you. Realtors and financial advisers can help you calculate the total interest costs for the term you choose. They should also be able to help you devise repayment strategies that increase affordability by lowering the overall interest bill, even if monthly payments are a little higher. Ask a lot of questions and get the answers in writing.

You can also play with the numbers yourself at personal finance sites like Quicken.ca. You don't have to be a mathematical whiz kid, just punch in the numbers and make sure you are comparing apples and apples.

The current five-year closed mortgage rate increase means payments on a $100,000 mortgage go up about $32 per month and about $385 a year. That's significant spending since most of those payments represent interest, not repayment of the principal (the amount you borrowed).

You can cut interest costs by shortening the amortization period, the amount of time it would take to pay the mortgage off completely. Typically, Canadians choose 25 year periods. As the amortization period goes down, the amount of interest paid goes down but monthly payments go up. On a new mortgage try arranging a shorter period such as 20 years. When renewing your mortgage, shorten the amortization period by as many years as you can afford.

Increasing repayment frequency may also reduce interest costs. Compare the repayment advantages of monthly, bimonthly and weekly plans. Also ask about fees which may eat up interest savings.

Lump sum interim payments can also lower overall interest costs. Find out what each lender will allow and what this privilege will cost you. On renewa,l paying off a few hundred dollars of the principal can affect the interest cost favourably.

The interest you pay is the cost of borrowing the money, not the cost of the house. As well as shopping for value in a house or condominium, you should shop for the best borrowing opportunity. Taking a mortgage based entirely on a rate comparison is like choosing one home over another based entirely on price, without seeing what else you get for your money. That's fine if you are ready to live with the consequences.

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Published: January 11, 2000

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Futurist and Strategist PJ Wade is "The Catalyst" -- intent on "Challenging The Best Become Even Better." PJ earned this title by translating the dynamic impact of Boomers and their multi-generation families into relevant insights that start people thinking and taking action—in business and in life. Author of 7 books and more than 1600 published articles, PJ encourages individuals to become their own futurist. PJ writes and speaks about the insight, knowledge and solid decision-making skills that professionals and their clients need to live and work in this vortex of change. For instance, since PJ knows that home is headquarters for the new decades-long "unretirement," she wrote the popular book "Reverse Mortgages: Best Friend, Worst Enemy... Your Choice! (CatapultPublishing.com), which is filled with suggestions and insight on protecting and using home equity. Her new business book, "What's Your Point?," which identifies 7 common mistakes professionals unknowingly repeat to their detriment, will be published in 2009. As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors -- and the clients they serve. A frequently-quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking -- a talent she regularly demonstrates in this column. For more on blogs, books and topics, visit TheCatalyst.com.