Ten signs you might need a tune-up

Like your car or your home, your mortgage benefits from a seasonal inspection.  Spring is just around the corner - so it's a great time to make sure your mortgage is in peak form!

Here are ten signs you might need a mortgage tune-up:

1. You are locked in at a higher rate than you could get today - and you want a professional opinion on your options;

2. You're thinking about moving to a new home this year - or considering buying an investment property;

3. You're still carrying way too much post-holiday debt;

4. In fact, you have more than $25,000 owing on high-interest loans or credit cards;

5. You're worried each month about whether your budget will stretch as far as the bills;

6. There's a renovation or home repair project coming up this year - either by choice or necessity;

7. An investment opportunity is available - and you wish you could take advantage;

8. There's a large expense looming - tuition, wedding, new car - and you need to plan ahead;

9. Your income might wobble or take a hit this year - and you want to be prepared just in case; or,

10.  You're planning on retiring in the next five years.
   
If you recognize one of the signs that it's time for a tune-up, give me a call or send an email anytime.  I'm happy to help!


~ Powered by Mortgage Intelligence

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Let's resolve... to clear these holiday bills and start building wealth!

Most Canadians suffer with their highest personal debt load in January, when the “holiday hit” arrives and our credit card statements let us know just how much we spent on the festive season. It’s especially hard if you already had a burgeoning debt load before the holidays.

This year, make the best New Year’s resolution ever: resolve to clear that debt, and start building wealth. With the right plan in place, this year could be the beginning of a strong new financial life. Start now, and every month you could be seeing the difference: a boost to your monthly cash flow, one easy payment, faster debt paydown, and potentially thousands of dollars in interest savings.

We can show you how to use your home equity to consolidate your high-interest debt into a new or existing mortgage. In almost every case, you’re better off rolling large amounts of high-interest debt into a mortgage. Why? Because we are benefiting from mortgage rates that continue to be among the lowest in decades. Just compare mortgage rates with what you’re paying on your credit cards and other debts.

First we’ll do an assessment of your situation. Here’s an example – mortgage, car loan and credit cards total $225,000. Roll that debt into a new $233,000 mortgage, including a fee to break the existing mortgage, and look at the payoff:

Current Situation*

Monthly payments on $175,000 mortgage - $969
Monthly payments on $25,000 car loan - $495
Monthly payments on $25,000 in credit card balances - $655

Current total monthly payments: $2,119

New Situation*

Monthly payments on $233,000 mortgage (debts + early payout penalty on mortgage) - $1,176
Monthly payments on paid off car loan - $0
Monthly payments on paid off credit cards - $0

New total monthly payments: $1,176

That’s $943 less each month! Now decide how to use that $943. If you put $500 into your mortgage payment, you’ll reduce your amortization from 25 years to 15. Or you could invest in RRSPs or RESPs and reap some tax benefits. Or consider putting some funds aside each month into a “December” fund – so you never have the financial pain of that “holiday hit” again!

It’s a new year. Make it the start of a new financial life. We’d love to help you crunch some numbers to see what kind of life you could be living, something to really celebrate about next New Year’s Eve!


~ Powered by Mortgage Intelligence

*4.5% current mortgage, 3.6% new mortgage, 25 year am. Credit cards 19.5% and car loan 7%, both at 5 year am. OAC. Subject to change. For illustration purposes only.

Photo credit: [c] Asif Akbar for stock.xchng

Debt denial can do you damage

A great article posted by the CBC today, entitled “Debt’s Dirty Dozen Danger Signs” highlights an issue we mortgage consultants come across all too often. That is: people waiting too long to ask for help.

As you may be aware, if you have equity in your home, and are feeling overwhelmed by your monthly payments on high interest debts such as credit cards or car loans, it is often possible to give you financial breathing room by doing a debt consolidation (paying off debt by rolling it into a lower interest mortgage). This can lower your monthly payments, and reduce your interest costs by a tremendous amount.

However, there’s a catch. If we get the call from our clients too late – after several mortgage payments have been missed, or credit cards are way over the limit, or debts have gone to a collection agency – it makes it very difficult, and sometimes impossible, to help. For example, most mortgage lenders are not excited about the idea of advancing several hundred thousand dollars, to clients who have already shown that they are consistently not paying their existing mortgage payment, and have not tried to re-negotiate terms with the existing mortgage lender. Because of this, the options we can offer you become very limited.

Your best bet is to call your mortgage professional as soon as you feel you might be running into trouble. We can help you review your options and figure out a plan of action.

Check out the article – it’s worth reading. And if you think you might need us to review your financial options, call now, not later.

Renewing your mortgage? Read this first!

Think of your mortgage renewal as a valuable opportunity. It's a chance not only to take advantage of today's great rates, but also get a mortgage product that better fits your current needs.

When you receive a renewal notice from your current lender, don't simply sign it without knowing all your options. If you do so, you could be paying a higher rate than you need to, and end up with a mortgage that might not be best suited to your requirements.

Often, by the time your mortgage comes up for renewal, you are most likely in a different financial position than when you first obtained it. As our financial and life circumstances change, so does the mortgage product that is best for our needs and goals. For example, you may wish to access your home's equity to consolidate other debts (especially high interest credit card debt), or perhaps help pay for a renovation or investment property.

So make sure to review your options thoroughly. Feel free to call me to discuss your situation. We can discuss your interest rate options, and help you with a customized mortgage strategy.

At renewal time, take the time to ensure you get the most from your financing. We can speak to any concerns you may have about interest rate trends and advise you on what to do as your mortgage renewal approaches.





- powered by Mortgage Intelligence


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Rate watch - rates on the rise

A couple of the chartered banks announced rate increases yesterday and today, and with bond yields going up recently, it is likely that the other lenders will do the same. 

If you're in the market for a home and don't have a pre-approval yet, or you've been considering refinancing soon, don't delay calling your mortgage consultant.  Lock in these low rates while you have the chance!

10 Tips for Obtaining a Mortgage After Bankruptcy

Sometimes bad financial situations happen to good people and bankruptcy is the only way out.  But there's hope – there are a number of strategies for putting your credit back on track and getting approved for a mortgage, even after bankruptcy. 

Here are some points to consider:

1.  Locate the right lender: Some lenders will not approve a mortgage if a bankruptcy shows up on a credit report.  However so-called "non-conforming" lenders may consider doing so, provided the borrower can demonstrate that he or she has the income to support the payments and is now a good credit risk. 

2.  Length of time since bankruptcy discharge: Different lenders have different criteria regarding the length of time since a bankruptcy after which they will grant a mortgage – often  two years along with proof of re-established credit.  Some lenders may consider applicants with a more recent bankruptcy – a mortgage broker can advise on the requirements of various lenders.  

3.  Reasons for bankruptcy: If a bankruptcy was due to factors beyond your control, this is more acceptable to the lender than if the bankruptcy was the result of poor money management and excessive debt, which can affect the terms of an applicant’s mortgage approval.   

4.  Size of down payment: With a past bankruptcy, most lenders like to see a minimum 10% down payment consisting of one’s own funds, and it can't be borrowed, or a gift.  A down payment of 5% or less may be permitted, in some circumstances.   

5.  The type of property: Some lenders will only lend on houses or row townhouses.  Very few will consider apartments or stacked townhouses, which may involve stringent criteria to qualify.

6.  Credit report: A credit report provides a picture of your financial health based on past behaviour.   Lenders are looking to see improvements over time.

7.  Credit score: A borrower’s credit score may determine the rate of the mortgage — the higher your credit score, the better the rate.  Some lenders have minimum credit score requirements for those with a bankruptcy.

8.  Rate considerations: Most lenders charge a higher interest rate and even some extra fees to those with a bankruptcy.  A lender may grant a better rate if certain lending criteria have been met, such as: two years since bankruptcy discharge, good re-established credit, minimum beacon scores, saved down payment, good debt servicing ratios, and a long-term history of job stability.

9.  Re-established credit: Re-established credit shows the lender that a prospective borrower has new credit and has managed it well since bankruptcy.  Typically, re-established credit should involve a recent record of on-time payments on major bank or credit cards.  If you are re-building your credit, you need to be aware that a missed payment at this stage could be mentioned on your credit report for the next six years, and could be grounds for some lenders to decline a mortgage application. 

10.  Don’t do it alone:  Consider asking a mortgage broker for help.  For those with bad credit and/or bankruptcy, a mortgage broker can coach you on how to improve your credit score over time.  While you work on bettering your score, a mortgage broker can advise you on how to get a mortgage despite bruised credit, and provide valuable expertise, both before, during, and after the mortgage financing process. 

Debt Restructuring – It Pays to Have a Plan

Many of us are carrying consumer debt from several sources – credit cards, car loans, personal loans, student loans – and are paying much more in interest costs than we should be. 

An option available to homeowners is paying off higher interest debts with a refinanced mortgage that has a lower interest rate. 

This is worth considering if you are paying a lot of interest for your other debts.  Debt restructuring can help lower your overall monthly payments, giving you financial breathing room rather than living paycheck to paycheck.  

Just as importantly, a well thought-out debt restructuring plan can set you up for success, because at the end of the amortization period, your total debt is zero.  With revolving credit – such as credit cards – you may be paying a lot in interest without ever attacking the principal. 

Let me know if you would like my help in reviewing your financial needs.  I can advise you on how to use the equity in your home to reduce the interest paid on your other debts.  We may be able to arrive at a solution that gives you more control over your interest costs, and leaves you with more money at the end of the month. 

Photo credit: [c] Adrian Van Leen for openphoto.net

Stress Test Your Own Debt

Worried about Canadians' sensitivity to a rise in interest rates?  A great article by the popular Globe and Mail columnist Rob Carrick reviews how you can test your own financial vulnerability, together with some solutions if you're getting into the trouble zone.  One solution Rob missed: if you have equity in your home, and have unsecured debt with high monthly payments, you may be able to significantly ease your cash crunch by consolidating the debt into a mortgage or home equity line of credit.   Then, you can focus on paying down the mortgage with any extra cash.  As Rob Carrick says, "Less debt gives you more immunity to higher interest rates."