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CategoryMortgage Tips

These Eggs do belong in one basket

Our parents taught us to pay our mortgage off quickly… Great advice, but they forgot to tell us to not incur other debt while we were paying that mortgage off….

A few years back, there was a study done about Debt Diversification by Moshe Milvesky, Associate Professor of Finance at Schulich School of Business Milevsky debt review.   The study showed that we were using the old rule of ‘Don’t put all your Eggs in One Basket’ and applying that to our debts.   And this is exactly what you should NOT be doing…

Investment diversification is GOOD, Debt diversification is BAD.   The study used $95,000 as a typical amount of diversified debt and $2,700 in idle cash…. the conclusion is that this combination results in a $1,000 loss per year by not managing debts properly.

If you have equity in your home and you carry a balance on your credit card, line of credit, or have a car loan or student loan, then you should consider utilizing the equity to borrow at the lowest rates possible… Residential Mortgages are always the cheapest form of financing…

National Home Ownership Week April 12-16

Genworth Financial is kicking off the traditional Spring housing market with a week of Online seminars…  Each day has a different theme….The goal is to educate prospective homebuyers and borrowers so they can make informed decisions….

The website is Homeownershiphelp.ca and here’s the schedule of events…

MONDAY
APRIL 12
TUESDAY
APRIL 13
WEDNESDAY APRIL 14 THURSDAY
APRIL 15
FRIDAY
APRIL 16
Credit Day Reality Check Homebuying Basics Test Your Knowledge Tips on Purchasing and Owning a Home
Learn the importance of good credit and how your credit history is established Find out how to reconcile what you want with what you can afford Understand the steps of home purchasing in Canada Take the Homebuyer 101 course Find out the fast facts that will help make your dream home a reality

Have a Variable rate mortgage at Prime +? renegotiate now and save.

With new variable rate pricing of Prime MINUS 0.45% and 0.50% available, this is probably a great time to break that mortgage and save some money…

Variable rate mortgages have penalties capped at no greater than 3 months interest… if you have a mortgage of Prime 0.25% or above, then you can save $thousands….   Call your Mortgage Broker for an analysis…

Is Affordability better or worse?

Here’s an interesting statistic…  5 years ago, a 5 year fixed rate mortgage was around 4.35%… and the maximum amortization was 25 years…. a $250,000 mortgage would cost you $1363/mth.

Today, a 5 year fixed rate mortgage can be found at 3.89% (and lower)… and the payment is $1300/mth….. let’s increase the mortgage to $300,000 and use the new maximum amortization of 35 years… new monthly payment is $1303/mth….

Affordability is better than ever… these historical low rates will not be here forever.. make sure you are taking full advantage…. talk with your Mortgage Broker for full details…

Don’t get trapped with dumb Bank ads…

Watching the Olympics the past few weeks meant I had to endure watching tons of RBC commercials… I normally reach for the clicker and change channels but gave up after they kept popping up every 10 mins.

One commercial in particular really bugged me… have you seen this one? The young couple are looking at a house with an old kitchen.  And then their RBC Mobile Mortgage Specialist suggests they split their mortgage … “part variable and part fixed…  to save money.”

Ok, can anyone tell me what that means?  ‘…To save money'”.   So splitting your mortgage will save you money?  Really? How? Who says?  Show me statistical data to support such a claim…

I remember that when these split mortgages became available at the TD Bank (I worked there in the 90’s), it was great idea to reduce how much business would leave the banks… Ask anyone that has been in a split mortgage what happened when it came time to renew the 2 split portions…you lose your leverage to negotiate the rate because you cannot transfer your mortgage out until both maturities match….

The result….you get whatever rate the Bank wants to offer at maturity….  BEWARE…. this is bank Kool-aid again… I don’t drink it…

Here’s another recent article about Bank commercials from Ellen Roseman of The Star.  This ties in with the bank ads portraying many of us idiots…

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