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Posted Consumer Debt

Debt diversification vs Debt consolidation…who wins?

debt

ONLY IN CANADA

Attention:  Bankers, close your ears.. we don’t want you to hear this.  Credit card balances, lines of credit, car loan, student loan, home reno loan, personal loan..   If you have one or more of these and you own a home, you’re probably losing money by paying a higher interest rate.  In many cases, $thousands are lost and overpaid each year.   And your Banker is laughing and recording Record profits!!

It’s surprising how many of us have some, or all of these debts… and ALSO a house with lots of equity.  Yet, as Canadians, we somehow think it’s better to separate our mortgage from other debts.  We somehow think it’s good to pay down our mortgage but then rack up other debts.  This attitude has puzzled me for years.

check out this chart for one client.. tell me if this looks familiar: Continue reading “Debt diversification vs Debt consolidation…who wins?”

Posted 5 Comments on Mortgage rate outlook 2017.. Expect Fixed mortgage rates to go up…Expect Variable rate pricing to drop. Interest rates

Mortgage rate outlook 2017.. Expect Fixed mortgage rates to go up…Expect Variable rate pricing to drop.

trudeau-trumpFixed mortgage rates have increased by about 0.40% in the last 6 weeks.   Today’s 5 year fixed rates are at around 2.89% and will could continue to go up in 2017.   There are political and fundamental reasons why rates have gone up. (oh, by the way..  it’s not panic time.. who ever said that 5 yr fixed rates were the best product to choose anyways? more on this later.)

FUNDAMENTAL REASONS

Govt of Cda bond yields have gone up around 0.55% since October (fixed rates are priced from govt of Cda bond yields).  It’s more expensive for Lenders to fund mortgages due to stricter government regulation and higher Capital holding requirements.  These increased costs are being passed down to the consumer.

Okay, this is the “how” the rates are higher.. but what’s prompted these fundamentals?  Why are rates higher?

POLITICAL REASONS.. IT’S ALL POLITICS Continue reading “Mortgage rate outlook 2017.. Expect Fixed mortgage rates to go up…Expect Variable rate pricing to drop.”

Posted 3 Comments on Mortgage Brief.. Mortgages rules explained… and why didn’t the govt consult experts? Interest rates

Mortgage Brief.. Mortgages rules explained… and why didn’t the govt consult experts?

Bill Morneautrudeau

They say we don’t read emails or articles anymore.. we just skim through them.   But some things can’t be understood with a quick glance.  The new mortgage rules will impact EVERYONE!

If you want to understand how they impact you, continue reading… If you don’t care or want to be oblivious, take the blue pill and move on.

I’ve put together a list of the mortgage rules so that you can understand what they mean and how they will impact you.   Hey, let’s give The Federal govt some credit… they’ve been transparent about a few things, right?:

  • They want house prices to drop.
  • They don’t want anyone to have a mortgage if their home is worth more than $1,000,000.
  • They don’t want you to ever refinance your mortgage.  You should only require a mortgage when you buy a house.
  • They don’t want you to buy a house and rent it out.  You should only buy a rental property if it has 2 or more units.
  • Mortgages should not be amortized for longer than 25 years.
  • They want rates to go way up.

Here’s the official update from our Department of Finance.

Here we go.. Forget the data and stats being reported today.  Those stats don’t matter!  We want to see the stats after March 30th, 2017.

Remember the mortgage rule changes of October 17th?  How about the ones on November 30th?  Get ready, we won’t see the full effect of these changes until after March 30th 2017.

That’s when the last of the mortgage approvals will have closed, that were done under the old rules. And all the new mortgage closings beyond this date, will have had to been qualified with the new rules.  This is when we’ll begin to see the impact of these rules… And we’ll begin to see just how many Canadians will be have been impacted.

If you think I’m wrong, read the rule changes below and tell me what other conclusions you can come up with. Continue reading “Mortgage Brief.. Mortgages rules explained… and why didn’t the govt consult experts?”

Posted 1 Comment on Bi-weekly payment myth… it doesn’t pay your mortgage off faster. Money saving tips

Bi-weekly payment myth… it doesn’t pay your mortgage off faster.

RRSP home buyers planFor 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.”

Posted Money saving tips

Bridge loans explained… your bank hates them but they are extremely useful

bridge-loansBridge 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”