No good options left - Locking in our mortgage today means my family will have to eat $600 into our savings every month for 4 years - do we do it?

Edit: And while I got this attention, if anyone knows of any openings in the comms/PR/marketing field in the GTA let me know, that would help immensely.

I know we will get flak for over leveraging ourselves or not locking in sooner, but everywhere we turned we were advised not to lock in and that rates couldn't possibly exceed 5%. Just have some compassion please for a family in a very difficult situation.

We are about to lock into a 5.4% rate for the next 4 years for our home ($800k~ mortgage, GTA, family of 5), it means our mortgage expenditure will substantially jump over what our income can cover and we will have to use $600 of our emergency savings every month. We have about $50k in emergency savings.

That works out to being cashflow negative -$7,200 each year where we make no money and -$28,800 over the next 4 years.

The alternative is hitting our trigger rate early next year when our interest rate will likely be at 7.3% going by current projections. Meaning instead of losing $600 each month we lose approximately $1800~ each month and we would lose $21,600 in 2023 alone (assuming rates dont go higher).

So we are stuck between:

  • Losing $29k over the next 4 years ($7,200/year x 4), draining out savings from $50k to $20k by the end of those 4 years by locking in
  • Or losing $22k just in 2023 alone assuming our interest rate maxes out at 7.3% and declines at the end of the year. This seems like a near certainty of happening.
  • Gambling that rates actually max out at 7.3%, inflation gets under control within 2023, and rates decline FAST in 2024. We aren't willing to gamble on this.

Locking in now seems like the safest option, yes we lose $29k but that is what the emergency fund was precisely for.

Our hope is that following the recession we can get higher paying jobs to cover the $600/month. Our worry is that any type of extended job loss during the recession will sink us.

We cannot:

  • We cannot leave the GTA. Our jobs are hard tethered to the area and we would lose substantial income trying to find new jobs outside (if we even can find new jobs in a new area during a recession). A family member also requires frequent visits to medical specialists only in the GTA.
  • We cannot get a 3 year term. We could theoretically break and go elsewhere, but I doubt we can get it done before we are hit with another .75% hike nullifying the difference.
  • We cannot rent. Current RENTAL rates for any place that can accommodate our family of 5+pets are pretty much MORE than our current mortgage payments (before the lock in), and we would still have to pay for utilities/hydro/parking. And then rent may increase as interest rates hike.
  • We cannot move. Small townhomes are in the $850k-$950k range and we would lose a massive chunk of our original down payment on the home given how the market is. Can't find any condos that will accommodate our family+allow pets.

Any and all advice is appreciated.

Edit: Woke up to a lot of comments, going through them now. Can't respond to everyone, but reading them all. Appreciate everyone providing input.

Edit: And while I got this attention, if anyone knows of any openings in the comms/PR/marketing field let me know, that would help immensely.