CategoryMoney saving tips

Posted July 11, 2014 Money saving tips

Mortgage renewal opportunities missed.

DON’T SIGN THAT RENEWAL AGREEMENT BEFORE SPEAKING WITH YOUR BROKER!

Summer is a great time. Vacations, time off, no school, sun and fun. It’s also a time when most of our mortgages come up for renewal. This year, things are a little different. The loooong winter is really making us cherish the precious few months of summer. We want to soak up as much of this warmer weather as possible.

This relaxed mindset appears to be making us easier prey for the BANKS mortgage renewal departments. Mortgage renewals will typically follow the same process. You get a renewal offer anywhere from 120 to 30 days prior to maturity. The BANKS will offer you a rate that may be lower than their posted rate but, it’s much higher than the market rate, and some of us will go back and negotiate, some will call a mortgage broker to get unbiased and true market rates, and some of us will just sign that renewal and send it back in.

In the old days, most of us would just sign and return that renewal to our BANKS. But that trend started to change over the last 10 years. Consumers were shopping, calling mortgage brokers and seeking out better products. Until this summer…. Continue reading “Mortgage renewal opportunities missed.”

Posted April 8, 20143 Comments Consumer Debt

A 2nd mortgage? Yes, this option can save you money.

Quick, what’s the first thing that comes to mind when you think of “second mortgages”? For some it could be that shady looking character in a smoke-filled pool hall… guys with gold chains and a baseball bat nearby. Maybe you’re thinking of someone in financial trouble. Or maybe it’s just someone who doesn’t want to pay outrageous costs and penalties to refinance their existing mortgage.

The mere mention of 2nd mortgages conjures up all sort of images. Most of them, negative. For many, a 2nd mortgage can be a last resort solution during a financial crisis. For several others, it can be an opportunity to save money. That’s right, to save money.

Sure, 2nd mortgages carry a higher interest rate than 1st mortgages but, they can also serve a purpose. One of those purposes can be to save you money. Yup, I said it again. There are some new trends emerging with today’s new mortgage products that are forcing consumers to seek other options. Two of these trends are INFLATED PREPAYMENT PENALTIES and NO FRILLS MORTGAGES! Continue reading “A 2nd mortgage? Yes, this option can save you money.”

Posted March 25, 2014 Money saving tips

Paying over list price has become normal.. but still requires a cool head.

Here’s a recent article in The Star where I provided some advice and comments on bidding wars.

The trend continues. Properties are selling for above asking price in hot markets across the country. In Toronto, it’s becoming the norm. Some say an epidemic.

Last month I reported on sales that sold for 128% and 138% of list price. We’re talking about selling prices of $1,035,000 and $1,150,000.

A few days later, we saw a home sell for $1,308,808. That’s $479,880 above asking price or put another way, 158% of list price. Sale prices this much above asking are either a clear case of listing too low, in the attempts of attracting multiple offers, with the hope of getting a higher than normal selling price… or, someone is paying way above market value for reasons beyond my understanding.

Continue reading “Paying over list price has become normal.. but still requires a cool head.”

Posted February 3, 2014 Case study

Lower rate = Lower payment and a Lower balance in 5 years!

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!”

Posted January 27, 2014 Consumer Debt

Debt consolidation tip… just pay less interest!

January is usually a tough financial month for most of us. Holiday bill payments, rrsp contributions, property tax bills and if you are self-employed, you probably have to make some sort of business tax or corporate tax payment. If December is the Holiday Season, then January feels like a hangover!

BANKS and Credit Card companies love this time of year because this is when we will normally carry a balance and have to pay those crazy interest rates that range from 9% to 24%. Wait, before you get too depressed, there could be a better option. There’s a less expensive way to manage your debt. Continue reading “Debt consolidation tip… just pay less interest!”