Canadian mortgage rates look like they are set to rise again - something to consider when evaluating what you can afford in a home. An online survey conducted for the Canadian Association of Accredited Mortgage Professionals (CAAMP) found that 375,000 borrowers are having challenges paying back their mortgages, and an additional 475,000 householders would be in difficult circumstances if mortgage rates rose to 5.25 %. Already, most of the big banks are currently showing rates of 6.10% or more for five year fixed-terms, though the average rate for borrowers that locked in mid-2009 to early 2010 year is 4.02%.

Many homeowners got higher-priced mortgage five years ago before the reduced lending rates came in, so that they are now not as affected by the rising rates as those who started borrowing in 2009. However, if you are among those who recently got in on an inexpensive variable-rate plan or are considering doing so, this would be a good time to consider locking in.

If you are searching for a property to purchase, you most-likely know that new rules have come in for government-backed mortgages that require you to demonstrate an ability to make timely payments on a five-year term. In order to project how rising rates can affect borrowers, it is helpful to know how much you can afford to borrow. Vince Gaetano, Principal Broker, and owner at MonsterMortgage.ca talked numbers with GlobeInvestor's Rob Carrick to explain what rising rates could mean for Canadian mortgage holders.

If you are thinking of getting a variable-term mortgage, consider that for every $100,000 in mortgage balance, every 1% increase would represent an increase of $83 per month between what you are now paying and what you could be paying in the future. So if you have a $400, 000 balance on your mortgage and rates go up by 1%, you would likely have to pay over $332 more a month, accumulating to an increase of about $3970 a year.

If you find yourself experiencing difficulty making payments after budgeting, contact your lender and let them know. Most lending institutions have contingency plans for leaner times and are willing to work with borrowers, so you should not have to suffer in silence. It is usually in the bank's interest to do work with borrowers, as they are likely to lose more if they end up with a foreclosure property over a renegotiated payment plan. If you are on a regular payback schedule, lenders are typically willing to extend the amortization period. If you are on an accelerated payback, they might allow you to decelerate your payback schedule. By extending the amortization, you will end up paying more in interest, but it will get you through the squeeze.