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

Top Ten for 2012!

Everyone loves to make forecasts for the New Year. With that in mind, we’ve put together a glimpse into the year ahead for Canadian homeowners – so you can plan for some great opportunities!

1. Low rates early in the year! So many financial experts were wrong last year when they predicted we’d see a rise in mortgage rates. But their loss is your gain. We are beginning 2012 once again at historically low mortgage rates.

2. “Green” money available until the end of March. The popular Eco-Energy Retrofit Grant is still available until March 31, 2012. You can access up to $5000 for improvements for energy-saving renovations to your home, but you’ll need to act fast. Before you begin work, you must arrange for an NRCan-licensed energy advisor to perform a residential energy assessment of your home. After the work is complete, a post-retrofit evaluation must be done by March 31, 2012. Full details are available at www.oee.nrcan.gc.ca. To register, go to www.oee.nrcan.gc.ca/register.

3. The wealth train is leaving the station! At some point rates will begin to rise to more normal levels of 5 or 6 per cent, and it’s possible the trend upward might start in 2012. If you are carrying household debt outside your mortgage, you have a great opportunity right now to board the “wealth train”. Roll your high-interest debt into a low-rate mortgage. Start spending sensibly, saving smart, and you’ll be well on your way to slashing your debt and building your wealth. When interest rates begin to rise, debt derails even the best financial plan. Do it now.

4. Never renew with your eyes closed. When your mortgage comes up for renewal your lender sends out a note suggesting you renew at their current offer. Never renew your mortgage with your eyes closed! This is your moment of opportunity to negotiate the best possible deal. Who knows if the same lender is the best choice? If a renewal is in your financial future this year, bring us your renewal notice. There are some great options out there; we’ll help you look around.

5. Check out the re-advanceable mortgage.  This is a terrific mortgage concept for those who want to pay down their mortgage and have flexibility should an unexpected opportunity or expense arise. The re-advanceable mortgage is the perfect solution. If an emergency comes up, an unexpected investment opportunity, or a special renovation project, you can access your equity without a fuss. It may be the “last mortgage you’ll ever need”.

6. Time to build an income buffer? It’s a bit ironic, but it’s always hardest to get money at the very time that you need it. If there is even a chance that your household income could take a hit this year, then talk to us about building a financial buffer using today’s low mortgage rates. Maybe you won’t need it. But if you do, you’ll be grateful you made the arrangements when you did. With the European debt crisis still wreaking economic havoc worldwide, unemployment and income fluctuations are still a risk.

7. Speed up your mortgage pay-down. Before rates rise, take the opportunity to beat down your mortgage principal. Build a plan to take advantage of your lender’s prepayment privileges! Consider changing from monthly payments to weekly or bi-weekly payments, and take some or all of your tax refund and put it against your mortgage principal. Your interest costs will go down with every dollar you’ve reduced on your principal amount.

8. Build a financial cushion. Your high-interest credit card should never be your emergency fund. This year, build a financial cushion: get in the habit of putting a small sum from every paycheque into a special emergency fund. A nice plump emergency fund is smart saving.

9. Staying put? Instead of moving to get the home you want, consider the many benefits of staying put. The right renovation – an addition, a new family room, a fresh kitchen – might be all it takes to turn the house you’re in, into the home of your dreams. It is almost always less expensive to renovate than to relocate – if an upgrade to your lifestyle is what you’re after!

10. Get your annual mortgage checkup. It’s your financial “medical”; early detection of problems can save your financial life! We like to know how your mortgage is working for you – and look for opportunities to make the most of your greatest budgeting asset! Book a mortgage review and make sure your plan incorporates what may be ahead in 2012: it could pay big dividends in the year ahead!

~ Powered by Mortgage Intelligence

Photo credit: [c] Gábor Suhajda for stock.xchng
 

All the best of the season!

All the best of the season to you and your families.  May the coming year bring you much joy and prosperity, and may we always remember to be thankful for the many blessings we have in our lives.

Talk to you in 2012!

Photo credit: [c] Axente Ovidiu for stock.xchng

Five Ways to Pay Your Mortgage Off Faster

Looking for tips on paying off your mortgage in the shortest amount of time?  For most of us, paying off our mortgages as quickly as possible is a priority. 

Here are some simple ways to pay down extra principal early on.  This will shorten the life of your mortgage and reduce the amount of interest you'll pay over the years.    

1. Round your payments up – this little extra adds up over time. 

2. Pay a lump sum whenever possible.  Use your tax refund, your annual bonus, or if you're lucky enough to get one, an unexpected cash gift, and put the money against your mortgage.  Most lenders allow you to pay up to 15% - 20% of your mortgage amount each calendar year. 

3. Increase payments when you get a raise.  Most lenders will allow you to increase your payments, and again, you are typically entitled to increase them by 15 - 20% per year.  Take advantage of their flexibility!

4. Make bi-weekly payments – you'll end up paying more toward the principal each year.  If you start doing this from the beginning, you can pay your mortgage off years sooner.  Not only that, but if you are paid bi-weekly, it makes your life simpler too!

5. Keep payments the same when mortgage rates have fallen.  This is applicable both in a variable rate scenario and when your mortgage is up for renewal and the interest rate has dropped.  Keeping your mortgage payments the same as before can save you thousands of dollars in interest. 

For inspiration, check out this article on Moneyville.ca - in which the author describes how he and his wife paid off their mortgage in three years.  Aggressive?  Definitely.  But, it does show that if you're disciplined and motivated, you can pay off your mortgage earlier than you think.

If you would like help with your specific mortgage question, don't hesitate to call or email me!

~ Powered by Mortgage Intelligence

Photo credit: [c] Jolka Igolka for stock.xchng
 

Home and Mortgage Essentials - December 2011 Issue

Did you know that Canadians are responsible for almost 25% of foreign purchases of U.S. property? It's not the first time I've talked about the fact that more and more of us are taking an interested look at the bargains available in those warm locales to the south. If you're thinking this might be for you, make sure you talk to specialists in cross-border taxation, local real estate experts in the location you're considering, and of course, a mortgage specialist like me if you are looking for advice on financing your purchase. 

The December issue of our monthly newsletter touches on this and more. Click on the image at left to check it out!

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.

Home and Mortgage Essentials - November 2011 Issue!

Curious about where home trends are heading?  Click the image at left for a sneak peek at what homes are projected to look like in 2015.  It has some great stats on mortgage paydowns too!