CategoryMoney saving tips

Posted February 27, 2015 Money saving tips

$15,000 savings by breaking his mortgage early and getting into today’s low rates.

Look, I don’t advocate paying penalties, however, if there is an obvious savings to be had, then you have to do it. We’ve reached a point where interest rates are so low, it’s worth a review. Here are some recent experiences with real people…. Enjoy.

I had one of my readers contact me about breaking his mortgage… His current mortgage with a good lender.. a Non-bank lender.. his rate is 3.59%. He took a 10 yr term last year. Balance was over $500k. So with 9 yrs remaining, we reviewed his options.

This was a no brainer. Penalty to get out was under $5,000 (lucky he was with a non-BIG SIX BANK). But the savings over the next 5 yrs would be $20,500. His net savings is $15,000. Would you I recommend he break the mortgage? Absolutely! Continue reading “$15,000 savings by breaking his mortgage early and getting into today’s low rates.”

Posted November 12, 2014 Case study

Attn: Ontario landlords… Rent control rules may not apply!

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!”

Posted October 21, 20143 Comments Bank News

RBC charges homeowner $8900 penalty, or 15 months interest charge!

Picture this… Your mortgage is with the biggest Canadian Bank in Canada. You feel safe. You got a great rate at the time… 2.99%. What could go wrong? Well, for these clients, and hundreds others, plenty!

Check out the RBC Discharge stmnt oct 2014 showing an Interest Rate Differential (IRD) prepayment penalty of $8912 on a mortgage balance of $213,562. Now, $8912 is a lot of money, but you’ve seen me expose even higher penalties in the past. Penalties as high as $35,000 and $40,000. But, put another way, that’s over 15 months worth of interest penalty being charged. And that’s just ridiculous!

NEWS FLASH! This type of inflated prepayment penalty calculation isn’t exclusive to RBC, the rest of the BIG SIX BANKS use a similar calculation. And they’ve been getting away with these outrageous penalties for over 14 years! (actually, this isn’t a new story.. I’ve been writing about these nightmare, or bankmare, penalties for years.)

Let me put this another way…. Continue reading “RBC charges homeowner $8900 penalty, or 15 months interest charge!”

Posted August 8, 2014 Money saving tips

But it came in a beautiful box?!

If I gave the option of choosing between 2 cell phones, which would you choose? Both phones had similar specs and were identical in almost every way… except PHONE 1 came in a nicely gift wrapped box with a bow on it. PHONE 2 came in brown paper bag but was less expensive and also had slightly better options.

Most of us would choose PHONE 2 right? Wrong! When it comes to mortgages, most of us are focusing too much on the beautiful gift box and not paying enough attention to the contents. They say around 47% of all mortgages go through a BANK and 39% go through a Mortgage Broker. Broker share is up, but not enough in my opinion.

When it comes to mortgages, the BIG SIX BANKS have been charging higher rates than what can be had from MORTGAGE BROKERS (see Bank of Canada study ‘competition in the Canadian mortgage market). And their inflated prepayment penalty calculations are now infamous (typical BIG SIX BANK penalties are around 4 times higher than other lenders).
Continue reading “But it came in a beautiful box?!”

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.”