As a follow-up to my previous post on Cash Flow, I wanted to dig deeper into how we can help, as well as the good and bad around some of the relief programs being offered.
First, How can we help? We are finding that many of our clients are able to save by refinancing their debts into one low payment.
Continue reading “How can we help?”
Is choosing a mortgage as easy as booking a trip or trading a stock? Let’s find out!
Sure, you can book a flight online or buy a stock through the web. But, can you really choose the right mortgage product on your own? Can you really find the absolutely lowest cost mortgage financing option? I’ll bet some consumers can. I’ll also bet the vast majority cannot. There’s a steady stream of horror stories, on this news site and others, that show just how costly and financially dangerous it is to be in the wrong mortgage product, with the wrong lender.
I’ve shared dozens of those experiences on this site. Consumers who were directed into the wrong mortgage by their Banker or by some web site claiming to offer ‘the lowest rate’. I empathize with these consumers as I believe they were just trying to save some money but instead ended up paying far more than they had to. Continue reading “Online shopping …. Stocks, Vacations and Mortgages. What’s the difference?”
I originally posted a breakdown of how mortgage penalties are calculated by different lenders on January 4, 2011.
This remains relevant today and, since this has been my most popular article to date, it’s worth a repost!
WE TOOK THE MYSTERY OUT OF HOW PENALTIES ARE CALCULATED
We decided this needed a more detailed explanation… but a strange thing happened when we started to answer these questions. We made a startling discovery. We caution you – the results could get your blood boiling if you’ve had to pay a penalty!
We found that the banks have shrunk or reduced the spreads between their Posted and Discounted rates on shorter-term mortgages over the past few years… and this has had a huge impact on Interest Rate Differential (IRD) penalty calculations. Continue reading “Mortgage Penalties: You could pay thousands to break your mortgage depending on your lender!”
When it comes to mortgages, $100 isn’t going to get you very far. But what if you paid an extra $100 a month towards your mortgage? It’s not a lot of money these days, but it can add up to some solid savings over time.
Let’s look at a $300,000 mortgage with a 2.89% rate and a 25-year amortization. At the end of five years, you’ve paid off an extra $6,444. The balance owing is $249,435. And the remaining amortization is 17 years and 9 months instead of 20 years. This also represents an interest savings of $11,423 over the life of the mortgage. Not bad!
Now let’s look at paying an extra $200 per month. At the end of five years, you’ve paid off an extra $12,888. The balance owing is $242,991. And the remaining amortization is 15 years and 11 months. This represents an interest savings of $20,708 over the life of the mortgage! Continue reading “How can an extra $100 boost your mortgage?”
A couple in their 30s contacts me for a mortgage. They want to buy a new home. She’s a high school teacher and he’s a computer firm manager. Incomes are good. I check their credit.
Let’s stop here for a minute… If they have good credit, an approval is simple and we can provide the clients with several mortgage options.
But let’s assume that this couple ran into some debt and credit issues three years ago… and they made three different choices about how to resolve those credit problems: 1) Credit Counselling; 2) Consumer Proposal; or 3) Bankruptcy. I want to take you through each scenario and show you how long each of these three options affects your ability to finance a home. I bet the results will surprise you! Continue reading “Credit counselling, Consumer proposal or Bankruptcy… Which option is most favourable?”
Mortgage rates have never been lower. Should you break your current mortgage to take advantage of the lower rates? The answer is ‘yes’ and ‘no’.
YES….if the penalty to break your mortgage is less than the potential savings. We are seeing many opportunities today where it PAYS to break your mortgage and get into today’s lower rates.
EXAMPLE for one client.. Existing mortgage is $275,000. The existing rate is 2.99% with 3 years to go. The penalty to exit is $3500. The current 3 year rate is 2.24%. Gross savings is $5602. Net savings is $2102.
NO… if the penalty to break your mortgage is less than the potential savings. EXAMPLE.. Penalty is $6500 and Gross savings is $5602. Net loss is $898.
YES… if you think interest rates are going to be much higher in the next few years, you may still want to bite the bullet, pay the penalty and lock into a longer term fixed rate mortgage. Everyone is different and has different needs, risk tolerances, plans. This is a personal choice.
I’ve seen examples of both situations. You could save money by breaking your mortgage. The best advice is to speak with an experienced Mortgage Broker. Get an UNBIASED opinion.
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
IS CHOOSING A MORTGAGE IS AS EASY AS BOOKING A TRIP OR TRADING A STOCK?…LET’S FIND OUT!
Sure, you can book a flight online or a buy a stock through the web. But, can you really choose the right mortgage product on your own? Can you really find the absolutely lowest cost mortgage financing option? I’ll bet some consumers can. I’ll also bet the vast majority cannot…. and there’s a steady stream of horror stories, on this news site and others, that show just how costly and financially dangerous it is to be in the wrong mortgage product, with the wrong lender.
I’ve shared dozens of those experiences on this site. Consumers who were directed into the wrong mortgage by their Banker or by some web site claiming to offer ‘the lowest rate’. I empathize with these consumers as I believe they were just trying to save some money but instead ended up paying far more than they had to. Continue reading “Online shopping for Stocks, Vacations and Mortgages. An In-depth comparison…”
A few years ago, I published a study on Rate shopping sites. These sites were gaining popularity with consumers as a place to go if you wanted to get the best rates. And they attracted a lot of attention.
You know the sites… they have catchy ads like ‘shopping for the Best Mortgage rates in Canada’ or ‘comparing Canada’s mortgage brokers for the best rates’.
Hey, who doesn’t want the best rate? These ads work. Canadians were clicking these links to get more info.
Sounds great, right? Yet, it’s not.
Continue reading “Rate shopping sites…tested again.. and failed again.”
Bad news travels 10 times faster than good news! It’s just human nature that we can’t seem to escape. We seem more likely to gossip about someone’s misfortune than their accomplishments.
Here’s a negative headline…. YOU LOST APPROXIMATELY $355,000, SO FAR, IF YOU’VE BEEN WAITING TO A BUY HOUSE SINCE 2008. Read on to see understand how and why.
Take Wednesday’s headline in the Financial Post, “Bank of Canada warns house prices are overvalued by up to 30%” . WOW! How’s that not gonna get your attention? It certainly got mine. I immediately had to read this article. But the more I read, the clearer it became that this statement wasn’t exactly true.
The article pointed to a semi-annual report that is put out by the Bank of Canada entitled, Financial System Review December 2014. That headline is an attention grabber.. And like most media headlines, it’s not the full story. In fact, it’s not an accurate reflection of what the Bank of Canada report had to say. If you look at Stephen Poloz’s (Bank of Canada Governor) comments, he says “there is some risk that the housing market is overvalued, and our estimates fall in the 10 to 30 per cent range”.
But he’s not done there.. Continue reading “Housing bubble? Waiting for the crash before buying has cost you 60% in the last 6 years.”
Did you know that Alberta has no residential rent control? And British Columbia landlords can increase rents by the rate of inflation PLUS 2%? In Ontario, the Landlord and Tenant Board sets annual rent increases. For 2014, the rent increase was a mere 0.8% and for 2015 the rents can only be increased by 1.6%. Anyone that’s bought a rental property has probably been following these rules for years. An increase of 2.2% over a 2 year period sounds great if you are a tenant, but somewhat unfair if you are landlord.
Now, what if I told you there’s a good chance your PROPERTY IS EXEMPT FROM ONTARIO’S RENT CONTROL RULES? Meaning you can increase the rents as high as you like. According to the Ontario Landlords Association, more and more properties are becoming exempt from Ontario’s rent control rules.
Continue reading “Attn: Ontario landlords… Rent control rules may not apply!”
Perhaps too much debt has made your monthly cash flow tight, putting you under some financial pressure and making it almost impossible to save for retirement. With the right plan in place, it may be possible to simplify your debt, reduce interest costs, and save for retirement, all without earning more or cutting your spending.
If you have enough equity in your home (you can’t refinance a mortgage above an 80 per cent loan to value), we can show you how to use that equity to roll your high-interest debt into a low-rate mortgage and make a large RRSP contribution if you have contribution room.
Here’s an example – mortgage, car loan and credit cards total $225,000. If you have enough equity, you can roll that debt into a new $233,000 mortgage, including a fee to break the existing mortgage, and look at the payoff. Continue reading “Use your mortgage to pull debt together and save for retirement.”
EVEN THE BANK OF CANADA SAYS MORTGAGE BROKERS WILL GET YOU A LOWER RATE.
The Bank of Canada did a study a few years ago called Competition in the Canadian Mortgage Market. The study concluded that consumers get a lower interest rate through brokers. They also said that higher income earners were actually paying higher rates because they are less likely to spend the time to shop around for lower rates.
Last week, I did an interview for the news media about what a broker does. They also interviewed one of my clients. This client owns more than one property, he’s an experienced real estate investor and a senior manager for a major corporation. He uses my service because I save him time and money. He trusts my advice. It’s that simple. Here’s a link to the article.
IS YOUR BANKER GIVING THE BEST RATE?
A simple question. How many of us can truly answer, yes? You walk into your branch, you see a posted rate. Then your banker shows you the “special rate” or “discounted rate”. And then maybe they tell you they can do a little better. But how much better? And why aren’t they giving this up front? Don’t loyal customers deserve the best? Does this game sound familiar?
Continue reading “Is your banker giving you their best rate?”
We all know that a lower interest means a lower monthly payment. But did you know that a lower interest rate means you will also owe less when your mortgage comes up for renewal? This has been overlooked by consumers and experts alike. I haven’t seen any articles covering this. And it should change how you choose your next mortgage product.
It all has to do with the effects of compounding interest. Let’s take a look at 2 borrowers, each with a $400k mortgage. Borrower 1 is Mary. Borrower 2 is Dave. Mary has today’s 5 yr fixed rate of 3.29%. Dave has the more normal rate of 5.50% (the rate most experts think we will see in the next 3 to 5 yrs). We’ll amortize both mortgage over a 25 yr term.
Dave’s mortgage has monthly payments of $2441 and a balance owing of $356,749 at the end of 5 years. Mary’s mortgage has monthly payments of $1953 and a balance owing of $343,728 at the end of the first 5 years. Notice the difference in the balance owing after 5 years. We are talking about a $13,021 difference. That’s the effects of compounding interest. Continue reading “Lower rate = Lower payment and a Lower balance in 5 years!”
Should I buy now with interest rates still hovering at record lows, or wait for prices to fall? When will house prices fall? … and by how much? What will the interest rate be in the future when house prices fall?
These are the questions most Canadians asking themselves these days. It’s no secret that Real Estate values are at an all time high in most parts of the country. The calls for a housing correction, crash, or bubble have been going on for almost 10 years now but it hasn’t materialized.
I won’t get into the discussion here about whether house values will drop or crash or when that could happen.. because I don’t think it should be part of the buying decision. That’s not a typo. Market timing is a dangerous thing. Stock advisors will tell you this. Buy now, if you are able to commit to the plan. Read on to see why I believe this to be true. Continue reading “Buy now or wait for house prices to fall? The results may surprise you…”
A couple, in their 30’s, contacts me for a mortgage. They want to buy a new home. She is a teacher, he is a Manager at a computer firm. Incomes are good. I check their credit. Let’s stop here for a minute.. If they had good credit, an approval is simple and we would provide the clients with several mortgage options.
But let’s assume that this couple ran into some debt and credit issues 3 years ago… and they made 3 different choices about how to resolve those credit problems. Credit counselling, Consumer Proposal and Bankruptcy. And I’ll bet the results will surprise you…I want to take you through each scenario and show you how long each of these 3 options affect your ability to finance a home.. Continue reading “Credit counselling, Consumer proposal or Bankruptcy? I only like one of these options.”
Remember 2008? It was almost 5 years ago that the U.S. sub-prime mortgage scandal erupted. October 2008, to be exact. That’s almost 5 years ago… And with October and November 2013 renewals being less than 120 days away, we can now lock in some rates for those upcoming renewals. So I thought this would be a great time to see what sort of advice and recommendations the Banks were giving to their mortgage customers.
THE BANK’S ADVICE
The funny thing is, Banks have never changed their advice or strategy. ‘Take a 5 year fixed rate’. That’s all the Banks seem to want to promote. And with good reason… it’s the most profitable product FOR THE BANKS. But historically, it’s NOT the best product to take. There is no historical data that I am aware of that shows taking a 5 year fixed is the best strategy. But I’ll get into that in more detail later. Continue reading “Looking back 5 years.. which mortgage product did your Banker recommend in 2008?”