For years, we’ve been told to pay our mortgage bi-weekly. Magically, it will pay your mortgage off faster. Hmm, let’s put that to the test.
(SPOILER ALERT!) Around 6 yrs ago, I wrote an article showing some simple but effective math to explain this. I’m constantly getting emails from my readers asking me what they should do..obviously, a popular topic.
Let me also say, there is merit to paying bi-weekly…I’ll explain further on.
HISTORY OF BI-WEEKLY PAYMENTS
Back in the mid 90’s, there was a huge marketing blitz by the Big Banks that promoted making bi-weekly payments instead of the traditional monthly payments. The sales pitch was that you could save huge amounts of money and pay your mortgage off much faster….save 4 or 5 years off your amortization…. Sound familiar? Well, BI-WEEKLY PAYMENTS DON’T REALLY SAVE YOU ANYTHING!
And I’ll prove it…. here’s the straight facts! Continue reading “Bi-weekly payment myth… it doesn’t pay your mortgage off faster.”
Bridge loans are short-term loans that bridge the gap between two different closing dates. More commonly used when an existing homeowner sells their home, and buys another home, with two different closing dates. But bridge loans have become a very popular way to take possession of that new home while it’s empty for 2 or 3 weeks to allow for renos. Best of all, it’s really inexpensive!
THE OLD WAY
In the past, most homebuyers would have their selling and buying dates match. It’s always been a bit of a juggling act as you have to pack your moving truck and unpack it, all in less than a day. Somehow, everyone manages to get it done… but you talk about one of the most stressful days in your life….moving ranks right up there! Throw in some kids, maybe a dog, and a house full of stuff and you have a real chore on your hands….
THE NEW WAY… Continue reading “Bridge loans explained… your bank hates them but they are extremely useful”
The surprise Donald Trump US election win has caught many off-guard. The pollsters have been quiet to comment after they all predicted a Clinton win.
Here’s what week 1 looks like, after the Trump win. The first few days saw some chaos in the stock market. Stock market went down and so did Govt of Canada bond yields.
However within a day, the stock market began to rise. The Dow Jones hit all time record highs. The Toronto market was up also, but not as much as the US. The Canadian $ took a bit of a beating. And the Govt of Canada bond yields started to rise. This last one is important to watch.
Fixed mortgage rates are closely tied to govt of Canada bond yields. We’ve now seen Bond yields increase by over 0.35%. that’s a huge increase in such a short period of time. Banks and Mortgage Lenders have begun to increase fixed mortgage rates.
Investors are betting on Trump stimulating the US economy and taking no foreign prisoners. That’s caused some jitters in the markets. I’m watching the markets closely. This could just be a short term reaction. Or, it could be an adjustment to the record low mortgage rates.
MY VIEW… Continue reading “Unexpected Trump win on Canadian mortgage rates and market.”
They say about half of all marriages end up in divorce. In Canada, it’s around 48%. In the U.S., it’s around 53% according to Stats Canada. You’ve probably heard these stats before.
But what happens when a couple splits and all the financial matters were being handled by just one spouse? In most cases (but not all), it’s the woman who is left with no knowledge of money matters. Over the years, I’ve seen hundreds of marital splits and in an overwhelming majority of cases, the woman is left in the dark when it comes to finances (that trend is changing as today’s women are becoming more financially astute.. good for them.. let’s continue that trend).
There is HOPE and HELP. Here are some things you can do to take charge of your finances before or after a marital split: Continue reading “Marital splits… woman seem to be at higher risk when it comes to finances.”
Much has been made about CMHC’s Economists ‘Red Warning’ that was put out for the 4th quarter of 2016. Let’s take a look at what the report actually says.
CMHC’s economists have 3 categories of measurement that are of concern. Overheating, Price acceleration and Overvaluation.
VANCOUVER AND TORONTO
The Vancouver market had already been identified by CMHC as having moderate Overheating and Price Acceleration and Strong Overvaluation. Toronto now has the same issues with the same Overall Assessment of Strong evidence of problematic conditions.
Put another way, CMHC believes the Toronto and Vancouver housing markets are vulnerable. While this is cause for concern, there was also some other info in the report that we should be probably not overlook… Continue reading “Mortgage brief.. CMHC ‘red warning’.. what’s it mean?”
In what I’d call, a Halloween Hangover move, TD announced they will be raising their Bank Prime Mortgage rate to 2.85% from 2.70%. In a circular I received today from TD, they threw us yet another surprise, in a month full of surprises.
What’s interesting is that on Oct 19, the Bank of Canada Governor, Stephen Poloz, was quoted saying he was considering lowering the rate.
Variable Rate mortgages are priced from the Bank Prime rate. TD is adding a 0.15% premium to all Variable rate mortgage clients.
We should be watching for the other BIG SIX BANKS to follow. If they don’t in the next week, the perhaps TD will pull back. TD seems to be telling us it’s due to market conditions (whatever that means). Personally, I think it’s just greed. There’s not real reason to raise the rates….
Stay tuned… this story hasn’t fully played out yet.
Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.
Steve Garganis 416 224 0114 email@example.com