Better Financial

I am not an economist, but having been in the industry a while, I am an “observationist” and I do like to plan ahead for changing market conditions. The so called “Trump Factor” is no different and if you are in the real estate market or plan to be, you should be considering the impact as well.

Now that he has been sworn in as president, it does not matter if you excited about the new president or totally upset, the fact is there will be many changes in many areas, and the real estate industry is no different.

What’s Happened So Far?

Well, mortgage rates are primarily affected by up and down movements in the bond market. Why? Because most mortgages are packaged as some type of bond transaction and sold to investors. Bottom line is that most expected Hillary to win the election. The upset victory by Trump resulted in an initial drop in the markets and then the stocks rebounded and kept going. As stocks climb, bonds usually dip due to a bond sell off.

So, we have seen a substantial change after the election. Mortgage rates did rise slightly but have since tapered off.  The bond market sold off when the stock market popped up because of optimism that the economy would get better.

Also, if Trump’s platform holds true, he is going to increase fiscal spending and invest in infrastructure. If this happens in conjunction with interest rates and monetary policy, this will lead to growth, new jobs, more money circulating, etc. Higher growth means rising prices (inflation). Inflation means higher interest rates to curb inflation and the viscous circle will begin.

Where will the economy be in 3, 5, 10, 15 years from now. It’s an educated guess at best. But if growth is in fact higher, rates will be as well.

Still, we must keep in mind that even if the prime rate does start to rise, there is no guarantee that longer term mortgage rates will rise as the prime is affected by the Bank of Canada and mortgage rates are affected by bond rates.

Ok, so what does this mean?

Bottom line, is it’s not clear or predictable yet. A lot still depends on if rates go up and by how much. Slight increases won’t change consumer or lender mentalities that much. However, a substantial increase would have a real impact.

In addition, I have not discussed the impact of the mortgage rule changes late last year, and although that is not the purpose of this writing, it cannot be discounted and these rule changes can affect interest rates and the market as a whole.

So, what to do is be prudent as always. If Trump succeeds, the US economy should do better and that would result in higher wages, inflation, etc. Likely, higher rates south of the border. If there is spill over and our economy mirrors some of the impact, then you can expect the same here.

The markets, real estate included, are largely driven by consumer sentiment and emotions. Right now, real estate is the “thing to do” and in our market at least, expect things to remain positive with very attractive interest rates in the near future. Long-term, who knows. Regardless, real estate has had its ups and downs over the years. Land, brick and mortar always seem to be a good bet in the long run.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!

Are you looking to get away from a high interest mortgage? Maybe you would like to pay your mortgage down faster? How about consolidating some credit card debt and improving your cash flow? Some home improvements? Refinancing with the equity in your home could provide a very effective solution for you.

Rates have creeped up a bit over the last couple of months, but they are still pretty low. This means that you could benefit from a lot of savings if you are considering refinancing. Depending on your needs and goals, refinancing could make a lot of financial sense and impact.

Here are some great reasons to consider refinancing in 2017

High Interest Rate On Current Mortgage

Have a look at your rate vs. what is available in the market today. Are you paying too much? It’s a great idea to visit your mortgage annually, even if you are in a locked term. There may be better options for you to consider.

The good news is that you’re not necessarily stuck in your mortgage to term. Yes, there may be penalties. But sometimes, it’s wiser to take some pain for the ultimate gain.

Consolidate Debt

Let’s face it, credit cards and lines of credit are not meant to carry balances. Furthermore, in most cases, the interest rate is ridiculously high. Remember that coffee table you purchased at such a great price? How much will it cost you by the time you finish paying it off? If you have credit card and other debt in the thousands of dollars following the holidays, those interest charges can add up quite quickly.

This is where you can use your home equity to your advantage. If you want to consolidate your credit card debt, it makes a lot of sense to cash out some of the equity in your home. Interest rates on mortgages are typically much lower than the interest you would pay on your credit cards if you had to carry a big balance over time.

This is a great way to get yourself in better financial shape if you’re looking to cut down your debt charges.

Fund Your Investments, Requirements

Yes, our home is our major asset and paying it off should be a primary goal. However, there are other things in life that come up. You can use the equity to your advantage for any number of things.

If your retirement fund needs a boost, a cash-out refinance can be a great way to make that happen. How about that investment property or second home you have been thinking about? Sending your child to college or university? Perhaps it’s time for a major renovation or addition? It might just be that your home is tired and needs a major upgrade such as windows, doors, a new roof? Your equity can give you the funds you suddenly need or that you have been planning for.

Yes, interest rates have increased slightly, but still pretty low. This makes refinancing still a very viable option for many and it could be that way for you.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!

The Purchase Plus Plan lets you add the cost of upgrades to your mortgage before you move in! Eligible upgrades include – a new electrical service, a new roof, central air, a new furnace, new siding, eaves, soffits, fascia, doors, windows, a new kitchen, carpeting… or any other renovation that would increase the value of the home.

 

The way it works is like this… Let’s assume that you are a first time buyer and have 5% down payment. Before the mortgage financing is arranged, written quotes are obtained from licensed contractors for the repairs and or the improvements to be done to the home. When the application for mortgage financing is made, the request is made for up to 95% of the purchase price PLUS up to 95% of the cost to complete the improvements.

Note: The lender will “hold-back” on closing the “improvement” portion of the mortgage until the work has been completed, normally within 30 to 60 days of closing. Once the work has been completed, the lender will advance the balance of the funds and the contractor can be paid.

 

What does this mean? let me give you an example. . .

The purchase price is: $150,000 X 95% = $142,500
The quote for the improvements is: $ 11,000 X 95% = $ 10,450
Total Mortgage is: $161,000 X 95% = $152,950

 

Therefore, an application is made for a mortgage in the amount of $152,950 which is 95% of the purchase price plus 95% of the improvements.

 

On closing this is what happens… The Mortgage advanced to complete the purchase is $142,500 plus the original 5% from the purchasers down payment ($7,500) sufficient funds to complete the purchase of $150,000.

 

After closing the contractor completes the improvements (normally within 30 to 60 days after the closing) the lender advances the hold-back of $10,450, the purchaser pays the additional 5% of the cost of the improvements ($550) and the $11,000 owed to the contractor can be paid as per the original quote for the work.

 

And you will get $11,000 of improvements done to your home with a cash outlay of only $550 (the balance was financed with your mortgage)!

 

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!

 

Florida Loan Process: Call Toll Free: (866) 215-9226. Foundation Mortgage CorporationCorporation Overview of the Florida Loan Process

Have interest rates fallen? Or do you expect them to go up? Has your credit score improved enough so that you might be eligible for a lower-rate mortgage? Would you like to switch into a different type of mortgage? How about consolidating some high interest debt or perhaps you require some funds for renovations, child’s education, etc.

The answers to these questions will influence your decision to refinance your mortgage. But before deciding, you need to understand all that refinancing involves. Your home may be your most valuable financial asset, so you want to be careful when choosing a lender or broker and specific mortgage terms. Remember that, along with the potential benefits to refinancing, there are also costs.

When you refinance, you pay off your existing mortgage and create a new one. You may even decide to combine both a primary (first) mortgage and a second mortgage into a new loan. Refinancing may remind you of what you went through in obtaining your original mortgage, since you may encounter many of the same procedures—and the same types of costs—the second time around.

Why consider refinancing?

Lowering your interest rate

The interest rate on your mortgage is tied directly to how much you pay on your mortgage each month—lower rates usually mean lower payments. You may be able to get a lower rate because of changes in the market conditions or because your credit score has improved. A lower interest rate also may allow you to build equity in your home more quickly.

For example, compare the monthly payments (for principal and interest) on a 5-year fixed-rate loan of $200,000 at 2.99% and 3.49%.

Monthly payment @ 2.99%          $945.57

Monthly payment @ 3.49%          $997.49

The difference each month is      $51.92

But over a year’s time, the difference adds up to                $623.04

Over 10 years, you will have saved           $6,230.40

Adjusting the amortization (length) of your mortgage

Increase the term of your mortgage: You may want a mortgage with a longer term to reduce the amount that you pay each month. However, this will also increase the length of time you will make mortgage payments and the total amount that you end up paying toward interest.

Decrease the amortization of your mortgage: Shorter amortized mortgages—for example, a 25-year amortization instead of a 30-year amortization. Plus, you pay off your loan sooner, further reducing your total interest costs. The trade-off is that your monthly payments usually are higher because you are paying more of the principal each month.

For example, compare the total interest costs for a fixed-rate loan of $200,000 at 3% for 25 years with a fixed-rate loan at 3% for 30 years, both over a 5-year term.

Monthly payment            Total interest (5 years)

25-year amortization @ 3.0%      $946.49                                 $27,738.70

30-year amortization @ 3.0%      $841.21                                 $28,224.68

Changing from an adjustable-rate mortgage to a fixed-rate mortgage

If you have an adjustable-rate mortgage, or ARM, your monthly payments will change as the interest rate changes. With this kind of mortgage, your payments could increase or decrease.

You may find yourself uncomfortable with the prospect that your mortgage payments could go up. In this case, you may want to consider switching to a fixed-rate mortgage to give yourself some peace of mind by having a steady interest rate and monthly payment. You also might prefer a fixed-rate mortgage if you think interest rates will be increasing in the future.

Getting an ARM with better terms

If you currently have an ARM, will the next interest rate adjustment increase your monthly payments substantially? You may choose to refinance to get another ARM with better terms. For example, the new loan may start out at a lower interest rate (greater discount based on the prime lending rate). Or the new loan may offer a “cap”, which means that the interest rate cannot exceed a certain amount.

Getting cash out from the equity built up in your home

Home equity is the dollar-value difference between the balance you owe on your mortgage (s) and the value of your property. When you refinance for an amount greater than what you owe on your home, you can receive the difference in a cash payment (this is called a cash-out refinancing). You might choose to do this, for example, if you need cash to make home improvements or pay for a child’s education.

Remember, though, that when you take out equity, you own less of your home. It will take time to build your equity back up. This means that if you need to sell your home, you will not put as much money in your pocket after the sale.

If you are considering a cash-out refinancing, think about other alternatives as well. You could shop for a home equity loan or home equity line of credit instead.

STEP BY STEP GUIDANCE!

  • Your Financial Forum advisor will help establish a game plan to help you to achieve your short and long-term goals.
  • We’ll keep you informed of industry trends and home financing options along the way. We’re always tracking current mortgage rates, and various options available in the marketplace
  • We are always available to deal with any of your questions
  • We grow by referral, therefore treating you right is the most important thing to us.

If you think you’re ready to get started with refinancing, let us know and we can set up a free consulting session for you.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!

YOUR GUIDE TO HOME OWNERSHIP

 

Want to know what it takes to move into the housing market with confidence?

Looking to stop renting and buying your first home? We can assist you in creating a logical and realistic plan in achieving the goal, the dream, of home ownership.  In addition, we will walk you through all the steps necessary to get to the finish line like finding the perfect mortgage, real estate agent, etc.

Can I really purchase a home?

Yes, this is a big deal. But remember, most of us have been where you are right now at some point. Sure, some have been blessed with a head start on a down payment or perhaps above average income levels and stellar credit. But these obstacles can be overcome and we want to help. We can help you with the entire process from improving your credit, helping you arrange and/or save for a down payment and of course with your mortgage requirements. It’s important to plan and have all these things in place so you know exactly what to expect. A home is likely the most expensive investment you will ever make, so let’s get this right!

Each individual is unique and each home is unique. However, the process of moving from a renter to a home buyer is the same, or at least should be. It should not involve a “seat of the pants” approach where one finds a home and then scrambles to get a mortgage and fulfill conditions.

That would only lead to disappointment and possible other financial damages.

This is where our Stop Renting Plan comes in. With this plan, we will take a snapshot of where you stand today, and provide you with a detailed map of what will be required to reach your goal of home ownership. This will include everything from credit, to down payment to a pre-approval you can count on. You’ll get approved to buy a home and underwritten upfront – before you even start shopping. This program eliminates the guessing and stress and will make the process of buying a home a lot smoother.

  • Establish a purchase price limit
  • Establish a timeline and budget
  • Make an offer with confidence

PLAN TO BE A HOMEOWNER:

MAKE YOUR INVESTMENT INTELLIGENTLY!

Moving Forward With Confidence:

Know exactly where you stand with credit, deposit, down payment and a mortgage pre-approval before you start your search! It’s easy and smart. While each situation is unique and some can accomplish their goals faster than others, having a map, a guide and a go to person for advice guarantees that you are moving in the right direction. You’ll know which homes fit your budget and what mortgage payment you’ll be approved for, so you can shop more efficiently. And, once you find a home you want to place an offer on, you’re in a better position to negotiate with sellers because they know you’ll be able to back up your offer.

Why The Financial Forum?

  • Establish a clear map and plan out your actions
  • Know exactly what is required and develop a timeline to reach your goal
  • Make the process realistic and efficient
  • Know how much you can spend.
  • Negotiating power

We know you’re excited, so we’ve made Stop Renting easier than ever. If you’re eager to be a homeowner, call The Financial Forum for your personal guide to home ownership!

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!

 

Bankrupt? Will you Still Qualify For A Mortgage? | Fortune Watch

WHAT’S THE DIFFERENCE?

Purchasing a home is very exciting and rewarding, no doubt about it. However, the process can also be confusing and overwhelming. There are many factors and issues that must be considered. You need to worry about the home details such as location, condominium or freehold, schools, proximity to essentials in your life, etc., etc.

However, the financing part of the purchase is also very critical and in fact, probably one of the most critical aspects of the home buying process. Yes, picking the right type of home, neighborhood, price point is very important. But so is the financing.

What Is the Difference Between a Mortgage Pre-approval vs. a Mortgage Pre-qualification?

Getting a Mortgage Preapproval

A mortgage pre-approval is the most valuable option. It is underwritten exactly as a mortgage approval would be, with the exception of the fact there is no actual property at this time to consider. All data required is captured, your credit is examined and your loan is underwritten as if it were an actual purchase. Once it is known what you can qualify for, an interest rate can be secured and locked in for up to 120 days. You will then be provided with a pre-approval letter along with a list of supporting documents that will be required to process your approval. Once you provide the documents and your underwriter reviews them, they will confirm that all is good to go with your purchase.

Getting a Mortgage Prequalification

For a mortgage pre-qualification, some basic information it taken from you; A credit report is optional by the lender. This results in a much less accurate estimate of how much you can afford. The lender is also unable to determine if there are any underlying issues in your credit report or otherwise that can be mitigated prior to your purchase. They simply rely on you providing an accurate estimate of your debt and credit score.

With pre-qualification, you won’t be as confident when shopping for a home since there has been no due diligence performed to determine your actual ability to qualify for a mortgage.

Beware

In looking for a suitable mortgage lender, ensure you know if you are being pre-approved or pre-qualified. Many, including lenders, use these terms as if they are both the same. They are not. Don’t go out making firm offers on homes and find out the hard way. You now know there is a difference.

Become an informed real estate buyer. Ensure you know your affordability and know what is going to be required from you to secure your mortgage.

If you think you’re ready to get started with purchasing a home, let us know and we can set up a free consulting session for you.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!

 

When it comes time to providing for your child or children, we all want to provide the best we possibly can and where you call home has to be at or near the top of this list.

If you’re a single parent, you probably want to give your children the best possible environment to grow up in. If part of your plan for that includes getting a house for you and your kids, there are a few things you need to think about.

Get Familiar with the Home Ownership Process and Requirements – Plan for It

Most have a general idea of what buying a home entails, but now it’s time to get down to specifics. Knowing the process and understanding the requirements means you can then plan for achievement and work towards your goal.

You need to know the down payment requirements, income requirements, credit requirements and more. You need to work on the individual pieces to the puzzle and bring it all to the table.

Ideally as a single parent, you would want to build up a savings account to accommodate your down payment and closing costs. But also, and more importantly, you need to develop an emergency fund. This usually means having 3 to 9 months of savings in case you lose your income. How much can be somewhat discretionary, but I would view 3 months as the absolute minimum and target for at least 6 months.

Next, you should look at how much you will have available for your down payment and closing costs. This will at least provide you with a maximum price range for a home, based on the minimum down payment requirements. The down payment amount you have available will also affect whether you have to pay for mortgage insurance or not, and if so, how much.

Now, you have to think about your monthly payment and include taxes, utilities, and other monthly expenses. You may have to tweak your purchase price expectations depending on what your monthly budget is, in spite of or in addition to your down payment availability.

Credit

One of the main factors lenders use to quantify loan applications is credit. Know what it is today, and know what it takes to get to where you need to be if it needs work. Remember, as a single parent, a lender can only rely on one credit score, so make it as high as possible.

If you are coming out of a relationship and your credit was mostly joint, now is a good time to get things organized. Now is also a good time to get to know how your credit score is generated and learn to work within those guidelines so you can achieve highest score possible prior to your purchase.

All too often, when becoming single and being used to two incomes, we rely on credit to meet monthly shortfalls, resulting in using credit as a fictional type of income. Yes, you will have to pay it back. It’s important to get into a plan and budget as soon as you can.

If you have a lot of debt that may affect your borrowing power, now is the time to set up a pay down strategy. What works? Different things for different people. I personally hate consolidation loans. The idea of shifting debt from one lender to another to have the privilege of having one payment does not appeal to me. There is no upside unless there is a drastic interest rate differential. I would rather see minimum payments made on all credit and a focus on making as large a payment as possible on your smallest debt to pay it off. Then the next smallest and so forth.

Child Support

If you are receiving child support, this income can be used to qualify for a mortgage provided it is verifiable. However, if you are the one paying child support, this will of course reduce your affordability.

Get Your Mortgage Pre-Approved

I am not talking about putting some info on a piece of paper and having someone tell you how much you can or cannot afford. I am talking about a formal pre-approval and doing some financial planning and forecasting.

Sitting down with a mortgage professional will tell you where you stand and how much you can afford. However, if there is any work to be done, they can also help create a road map for you so you can achieve your goals.

Plan short and long term when looking for your home

You have to purchase something that meets your current situation. But you also have to be realistic in determining how long you will be in this home. What does the future look like? It depends were you are at in your life. Are you kids very young or are they in high school and may be moving out soon? Do you need room to grow?

How are the schools in the area, do they meet your needs? Is getting to and from work easy. Does the home need work? If so, do you have the funds for this? Take a close look at your overall situation and determine whether buying makes sense for you.

If you think you’re ready to get started with purchasing a home, let us know and we can set up a free consulting session for you.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!

 

 

 

Business & Finance

Do you know what makes up the majority of revolving debt for most consumers? Credit cards

Probably not a surprise, but the appetite for credit cards continues to grow, and it shows no signs of changing.

For many, debt gets to a point where is suffocates you, it becomes overwhelming, it controls you and becomes a major point of stress. It could even replace another four letter word we often hear. Debt, when left unmanaged, is toxic and can bring individuals and families crumbling to their knees. But, there is a choice and there is a solution, if you are willing to face the facts and conquer your fears. If you are looking for a solution, a debt consolidation mortgage may help you get back on track provide the peace of mind you deserve.

What Is A Debt Consolidation Mortgage?

A Debt Consolidation Mortgage is a way for you to take your high-interest credit card debt and other debt and combine it into one monthly payment, together with your existing mortgage or as a separate mortgage. But, just because it sounds good, doesn’t mean it is. You must be certain that the new structure will not only improve cash flow, but also does not take so much longer to pay off the debt that it nullifies all of the savings.

Regardless, if you’re paying on multiple credit cards and only making the minimum payments each month, your interest is going to add up and debt reduction to any significant extent is virtually impossible. Typically, consolidating your high-interest debt allows you to make one monthly payment, save money in interest and pay off your debts in a shorter amount of time.

How Should You Prepare For Debt Consolidation Loan?

Credit

When you apply for a debt consolidation mortgage, the lender is going to check your credit report and score, so it’s a good for you to have a handle on where you stand. If there is anything you can do to enhance your credit in advance, you will have more leverage on the interest rate and other terms of the debt consolidation mortgage. The better your credit, the higher your chances of securing the best rate.

Check for inaccuracies and errors

You have the right to dispute any inaccuracies and errors on your credit report. If there’s inaccurate information or something on your report that does not belong, take it up with the credit reporting companies (Equifax, TransUnion). Ultimately, inaccurate information on your report may be holding you back from a better interest rate.

Timely payments

Paying your bills on time, every time will help your credit. Even if you can only make the minimum payments, it’s extremely important that you make your payments on time.

Is debt consolidation right for you?

Debt consolidation isn’t right for everyone. Figure out the current and post scenarios to see if a debt consolidation loan will work for you. You’ll also want to be sure to read the fine print – there may be fees attached to the loan you that you didn’t know about. You must factor in the interest rate, and all fees to determine your savings, if any. You must also calculate how long it will take you to pay off the debt consolidation mortgage vs. how long it would have taken you to pay off the existing debt. Remember, if an offer sounds too good to be true, it probably is.

Whether you choose to entertain a debt consolidation mortgage or not, you need to make sure you have a game plan for how you’re going to get out of debt. You need to know where your money is going each month and make a plan to get your debt paid off in a reasonable time. Doing nothing is not an option.

What Now?

Instead of letting your mortgage continue to be part of the problem, you can make it a key in your plan to get out of debt. How?

Mortgage rates are currently very low. This means you can roll your debt into your mortgage and pay a much lower interest rate. It’s a type of cash-out refinance where you use the existing equity built up in your home to pay off debts.

The Benefits of Debt Consolidation:

  • Multiple payments and creditors into one manageable payment
  • Can reduces higher interest rates
  • Can brings credit cards and other debt to zero
  • Lowers the amount of interest you pay
  • Improves your credit rating

When to Consolidate

  • More than 10 percent of your take-home pay goes for non-mortgage debt (including credit cards, student loans, car loans and personal loans)
  • You struggle to meet your monthly payments
  • You have been unable to invest in a savings plan
  • You have debts carrying an interest rate of 10 percent or higher
  • Mortgage rates are lower than rates on your other financing options

If you have debt that’s bothering you, remember to look at all your options. It may be easier than you thought to get out of debt. For more info on debt consolidation and cash-out refinance, give us a call or send us an email.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!

You hear and perhaps read about this topic often enough. But, have you ever considered to explore practical options that can be implemented and really can work for you? Let’s explore.

Winning The Amortization Battle!

Yes, it is possible to cut down a 25 or 30-year amortization to about half with some strategies and techniques.

Remember, each month you shave off your amortization is hundreds of dollars, perhaps even thousands. Can you imagine the impact of shaving off months and years from your amortization? The presents an enormous opportunity and should be explored.

However, the majority of people just continue making their normal month payments and renew at expiry and keep things running on “auto-pilot”. They don’t plan to pay the mortgage off sooner, they only plan to make their monthly and hope they have some extra to pay down each year, which rarely ever happens.

Paying off your mortgage faster not only frees up cash flow, but also provides you a better quality of life and presents you with many opportunities to invest that you would otherwise not be able to entertain.

If you motivated to make some progress, here are some tips that may help.

Shorten the Amortization!

Time is money and with mortgages, there is no way around this. There are all kinds of methods being preached to pay your mortgage off faster, including bi-weekly payments, pre-paying your mortgage, etc.

Accelerated bi-weekly or accelerated weekly payments are an obvious to me. You will hardly feel this in your budget, especially if you are being paid in the same frequency. Huge savings, very little effort. BE CAREFUL. Many lenders offer both accelerated and non-accelerated payment frequencies. Non-accelerated with serve no purpose in accelerated debt reduction.

Bottom line is to save money on your mortgage you need to pay it off as quickly as you can. Just keep it simple. Even if it’s not paid off, while you are making attempts to paying off sooner, its saving you money. It’s an automatic.

For example, if your mortgage was originally $400,000 at 3% over a 30-year amortization, your monthly repayment would be $ 1,682.41. Over the 30 years, this equals an overall total repayment amount of $605,667.60.

However, if you changed the amortization to 15 years, your monthly repayment would be $ 2,758.75 per month. The reduces the total amount you will pay to $ 496,575 – this will save you a whopping $109,092.01!

Now keep in mind this is just an illustration, so you don’t need to go drastic, you can even go from 30 years down to 29 years and make an impact. On the other hand, the illustration uses a relatively low interest rate. The higher the rate, the more the savings.

Whenever possible, lower your amortization to an affordable amount, however minimal you think the impact will be. It works.

Set Your Payments At A Higher Rate, Especially If You Are On A Variable Rate Mortgage

Interest rates at record lows, so there should be room to budget your payments at a higher rate on an “as if” basis. This will get you months and years ahead of the game as far as paying your mortgage off sooner is concerned. Set your payments “as if” you have a higher rate of interest. Get the mortgage at the lowest rate you can and then set your payments at 1 percent (or whatever you can afford) above the repayment amount. If you are on a variable rate, this also provides you with a buffer so you will not feel it so much in your budget should rates increase.

Yes, paying off your mortgage is possible and very likely if you do things right. Make a plan of how much interest you would like to save and what date, year you would like to be mortgage free and set your accelerated payments and amortization period accordingly while allowing a buffer for rate increases. You will get there faster than you think.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

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Doesn’t matter what education level or career path you chose, everyone longs for financial security and financial freedom for retirement. When you are young, 30 and 40 year olds seem very old, over the hill and past their prime. However, time passes quickly and you will soon realize how young 30 is, yet how fast you reached this age.

Feeling young also means putting things off. That “forever young” feeling is quite common and leads many to putting off setting their financial goals or if set, working towards achieving them. It’s important you set your finances up early, and work towards your milestones as diligently as possible.

Getting on the right track involves a look at many aspects of your life. However, here are a few pointers to set you off in the right direction.

Contribute Regularly to your RRSP

Time is only your friend when you take advantage of it. Start early and start contributing a set amount of your earnings towards your RRSP. Do this with your regular pay intervals rather than at the end of the year when you have to write a big cheque. This will ease the burden and allows you to harness the power of compounding interest.

As a rule of thumb, set your goal to have 50 percent of your current annual salary invested into RRSP’s by age 30. Regularly visit and tweak your contributions so that you are able to achieve this goal.

Pay Yourself First

Set aside part of each pay for a savings plan. This could go in to a TFSA account or even just a savings account. Regardless, ensure that you set up a savings plan and that you always have funds set aside to cover emergencies or expenditures without having to go into debt. Credit Cards are not meant to carry balances. They should be paid in full each and every month. Start small and work your way up. Your initial goal should be to have 3 months of living expenses saved. Once you reach this goal, work your way to 8 months, then 12, etc.

Set A Goal Of Buying Your First Home Rather Than Renting

Even if it makes more sense for you to rent, rather than own, save for a home purchase, even as an investment. Owning a home is forced savings and builds equity. Even if prices do not appreciate, with today’s low rates, you are paying a considerable portion of the mortgage off each and every month. Real estate prices do in fact increase however, which will make you realize even a higher gain on the investment. Renting year after year will result in no gains and after tax expenditures for rent with nothing to show for it.

Debt Can be Your Enemy

Many people, especially the young, have a hard time managing their credit card and other debt. Ensure part of your goals is to have debt fully under control. Keep your loans to a minimum and do not carry balances on credit cards. If you find yourself purchasing items on credit cards and not being able to pay them off the next month, something is wrong and needs to be re-visited. Budgeting is key.

Set Up Your Life Insurance

Sure, no one bothers to think about this in their 20’s. But, setting up a plan based on future requirements early will save you thousands of dollars over the years.

We won’t know what life will throw at us. But planning ahead, setting your goals and monitoring your game plan will go a long way in making your future much brighter.

Have any questions, need any advice? Visit us at www.thefinancialforum.ca. Email us at mortgages@thefinancialforum.ca. Call us at (905) 265-0246.

VERICO The Financial Forum Ltd.

“Your Connection To A Better Mortgage”

Together, We Make Mortgages Easy!