Mortgage Alerts Canada

Say you are 30 and you feel it’s time to think about retirement in three decades. There is a lot unpredictable about those 30 years.

You could have children. Your parents could need financial help. A business or a career can flop. Yogi Berra, the great New York Yankees catcher and manager, gets credit for saying, “making predictions is hard, especially about the future.” If only he had tried planning a retirement. What can go wrong is more than just the details of one’s personal life. Inflation could take off, as it did in the early 1980s when prices rose at double digit rates. Click here to continue reading the full article.

Mortgage rates set to increase further

While the Bank of Canada came out to say that lending rates are going to remain unchanged still, the Bank of Montreal (BMO) has come out fighting to try to capture a larger market share. What this means is that they are looking to take advantage of a sluggish market by getting one over on mortgage brokers.

With a bite that is substantially worse than the bark, the question of low rate or flexibility is continuing to be a hotly debated topic. BMO have gone to take out other by offering one that is fixed for five-years at 2.99% which isn’t being matched by any competitor, who stick to their guns with four-year deals.

What’s the controversy?

While this is great news for mortgage shoppers, there has been criticism of the bank because of the existing debts that are with Canadians. Just because you can afford the rates today, what happens down the road? Will the increased rates lead to failure for all of us? Remember that while it might seem good in the short-term, once re-mortgaging comes in you may well be well out of pocket.

Is it the rates or the terms that rule the roost?

As mentioned, this deal will have people needing a mortgage grinning from ear to ear, but for how long? This is a no frills package, and while a quick deal can work in the supermarket it tends to even itself out in a long-term mortgage. While going for the lowest rate may seem like the obvious option, life is renowned for being unpredictable so be sure to check before signing the dotted line.

How do you find the best mortgages?

With banks competing for clients and increased mortgage rates likely, it’s time that you knew just how to get the right deal. There are two ways in which you can go about trying to find your mortgage, direct at the bank or work with a mortgage broker to find the right price for your credit.

While it can seem like the obvious choice to go with the bank, they will only have certain deals that match what you want. Looking a little deeper and getting the right <a href=”http://www.ratesupermarket.ca/mortgage-brokers-canada/”>mortgage brokers with Ratesupermarket</a> can make a huge difference because it’s not only the rates that are important but the package.

Working with a professional minimises your risk, you don’t get lured in by promotions and can find proper protection for what you want. Many people go with banks if they have a steady job with a brilliant credit history, and while this isn’t always the case self-employed and people with low credit ratings will tend to find better deals with a broker.

-Michael Edmonstone

With mortgage rates still hovering near historic lows, chances are you’ve considered breaking your current mortgage and renewing now before rates rise any further.

Perhaps you want to free up cash for such things as renovations, travel or putting towards your children’s education? Or maybe you want to pay down debt or pay your mortgage off faster?

If you’ve thought about breaking your mortgage and taking advantage of these historically low rates, feel free to give me a call to discuss your options.

In some cases, the penalty can be quite substantial if you aren’t very far into your mortgage term, but we can determine if breaking your mortgage now will benefit you long term.

People often assume the penalty for breaking a mortgage amounts to three months’ interest payments so, when they crunch the numbers, it doesn’t seem so bad. In most cases, however, the penalty is the greater of three months’ interest or the interest rate differential (IRD).

The IRD is the difference between the interest rate on your mortgage contract and today’s rate, which is the rate at which the lender can relend the money. And with rates so low these days, the IRD tends to be greater than three months’ interest. Because this is a way for banks to recuperate any losses, for some people, breaking and renegotiating at a lower rate without careful planning can mean they come out no further ahead.

Keep in mind, however, that penalties vary from lender to lender and there are different penalties for different types of mortgages. In addition, the size of your down payment and whether you opted for a “cash back” mortgage can influence penalties.

While breaking a mortgage and paying penalties based on the IRD can result in a break-even proposition in the short term, if you look at the big picture, you’ll see that the true savings are long term – as we know that rates will be higher in the years to come. Your current goal is to secure a long-term rate commitment before it’s too late, and here lies the significant future savings.

As always, if you have questions about breaking your mortgage to secure a lower rate, or general mortgage questions, I’m here to help!

Whether you’re planning for Christmas, Hanukkah, a big New Year’s Eve party, a trip to visit family or friends, or a winter vacation, the time is now to get your finances in order to avoid debt and regrets that can lead to the holiday blues.

The season of gift-giving and fellowship too often creates the spirit of giving far beyond what you can realistically afford. But if you start now you can be holiday guilt- and debt-free for the New Year. Here are three tips to help you stay on track.

1. Create Expectations and Family Buy-In. You may have a magic budget number in mind, but unless everyone is willing to stick to it, then the target is useless. The key is to communicate with family members and begin planning now to avoid last-minute weaknesses and over-buying. Minimal lifestyle changes such as skipping dessert in a restaurant, packing a lunch, or renting fewer movies can help save money that can be earmarked for the holidays. Kids can contribute to a coin jar and learn about the value of saving as well.

2. Make a List & Definitely Check it Twice. Record everyone on your gift-giving list and be sure to check it twice. Set recommended amounts and then keep track of spending along the way. Recognize that over-spending in one area means that you must reduce costs in another – a notion that’s easier said than done when you’re in the throes of the holiday spirit. Check your list for necessities and consider changing the amount of a gift if your budget is looking tight. Remember that it really is the thought that counts!

3. Say No to Last-Minute Temptations. Stores know the temptation of exquisite decor displays and fabulous clothing that lead to impulse purchases and, with it, a case of buyer’s guilt later. Be strong and don’t give in. A pass on that $100 lush velvet skirt today may ultimately lead to a much happier and financially-fit spring season next year. A general guide: if it’s not on your “approved” list, then the answer is no. Exceptions can occur, of course, on last-minute party invites or occasions, but keep close watch on overall costs.

Planning ahead really can save you money down the road. And with the high-cost holiday gift-buying and entertaining season quickly approaching, this may be the perfect time to refinance your mortgage and free up some money instead of relying on high-interest credit cards.

You may find that taking equity out of your home will help bring joy back into your holiday season – and start the New Year off on a debt-free note, as you may also be able to use some of the equity in your home to pay off high-interest debt such as your credit card balances. This will enable you to put more money in your bank account each month.

And since interest rates continue to hover near historic lows, switching to a lower rate may save you a lot of money – possibly thousands of dollars per year.

There are penalties for paying your mortgage loan out prior to renewal, but these could be offset by the lower rates and extra money you could acquire through a refinance. I can sit down with you and work through all of the equations to ensure this is the right move for you.

With access to more money, you’ll be better able to manage both your holiday spending and existing debt. Refinancing your mortgage and taking some existing equity out could also enable you to do many things you’ve been

longing to accomplish – such as purchasing an investment property, taking that well-deserved vacation, renovating your home or even investing in your children’s education.

Paying your mortgage down faster
By refinancing, you may extend the time it will take to pay off your mortgage, but there are many ways to pay down your mortgage sooner to save you thousands of dollars in interest payments. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.

You can also increase the frequency of your mortgage payments by opting for accelerated bi-weekly payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage.

By refinancing now – before the holiday season is in full swing – and planning ahead, you can put yourself and your family in a better financial position.

As always, if you have any questions about refinancing, reducing debt or paying down your mortgage quicker, I’m here to help!