Find the Money

Your third baby. An invitation for your son to play rep hockey next season. Your daughter’s acceptance letter to a premier ballet school. Some of the most important news headlines of your family’s life come with a sobering chaser: Will we be able to afford this? The averagefamily’s budgetis tight, with little room for those surprise extras. But here’s good news: There are ways to find the money you need, without racking up a crippling balance on your credit cards — and without having to make any permanent lifestyle changes. Here are five of the best.

Put your home to work for you

Chances are your mortgage is the family’s largest expense. While we can’t recommend a technique for making it disappear (aside from maybe winning the lottery), there are ways of using a home loan to your family’s financial benefit.

Borrow from the house
When you need more than a few thousand dollars for an expense that will add value to your family life, adding to yourmortgage principalor taking out a home equity loan or line of credit is a smart move, says Patricia Lovett-Reid, senior vice-president with TD Waterhouse Canada and host of the personal finance television showMoneyTalk. A perfect example: constructing a third bedroom to the “starter home” that’s too small to accommodate the children you already have, let alone the baby you’re expecting next spring. Post-reno, you’ll be much more comfortable, plus your property’s resale value will have skyrocketed.

Borrowed money that’s secured by the value in your home is the cheapest you can get because lenders know that if you ever default, they can collect through the sale of your home. (Serious stuff — so use only as much borrowed money as you need, which will help ensure you can always make your payments on time.)

Should you bump up your mortgage amount or ask for a home equity loan? That is a personal decision that depends on a number of factors, including how much you still owe on your home, how disciplined you are with spending and what you need the money for. But a sit-down meeting with your lender can help you make the right decision, says Rick Jaques, a BMO Bank of Montreal district vice-president in Windsor, Ont.

Stretch out your payments
Need smaller amounts of money over a long period — for example, to squeeze in the cost of a second weekly ballet class for your budding Baryshnikov? Boost your cash flow by reducing your monthly mortgage payment. Ask to increase your amortization — that’s the number of years your total loan is spread out across. The longer you take to pay, the less you will have to shell out each month. Let’s say that you currently owe $200,000 on your home, with payments of $1,786.50 per month over the next 15 years. If everything else stays the same, including your seven percent interest rate, simply changing your amortization to 20 years will reduce your payments by nearly $250 a month. Change it to 25 years, and your payments drop by nearly $400 a month.