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LIST OF TOPICS	DON'T WAIT FOR YOUR MORTGAGE TO MATURE PAYMENT FREQUENCY IS NOT THE MAJOR FACTOR 95% FINANCING NOT JUST FOR FIRST TIME BUYERS CASHBACK OR DISCOUNTED RATE? MOST CANADIANS PAY A HIGHER INTEREST RATE IN A DECLINING REAL ESTATE MARKET PROPERTY TRANSFER TAX YES OR NO?
DON'T WAIT FOR YOUR MORTGAGE TO MATURE before shopping around for an interest rate. Some lenders will guarantee rates as much as 120 days before your mortgage matures, at an excellent rate. And, as long as you are not increasing your mortgage, they may cover the costs of transferring your mortgage too. This eliminates the worry of a higher rate at maturity and, if rates drop before your actual maturity date, the new lender will adjust your interest rate to the lower rate. See the Article on Transfer or Switch Mortgages.
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PAYMENT FREQUENCY IS NOT THE MAJOR FACTOR in reducing the amortization period of your mortgage. Principal reduction is! But what about all the talk of bi-weekly payments taking five years off your amortization period. Not so! Although you will save some interest making your payment bi-weekly, ultimately it is the fact that your total payments each year are higher that results in the significant reduction in amortization. For instance, when a client chooses a bi-weekly payment of $500 over a monthly payment of $1000, in fact they are choosing to pay an extra $1000 annually. In most cases a bi-weekly payment is simply a monthly payment divided by two. That means that instead of paying $12,000 in monthly payments, you are now paying $13,000 in bi-weekly payments. That extra $1000 is what ultimately cuts the years off your mortgage. But you can do close to the same thing by increasing your monthly payment, if a monthly payment frequency would be more convenient for you, or by taking an accelerated semi-monthly payment. See the numbers below: Based on $200,000 Mortgage at an Interest Rate of 6.15% MONTHLY Regular MONTHLY Accelerated SEMI-MONTHLY Accelerated BI-WEEKLY Accelerated Payment $1,297.50 $1,405.62 $702.81 $648.75 Yearly Payments $15,570.00 $16,867.44 $16,867.44 $16,867.50 Extra funds paid each year compared to monthly regular N/A $1,297.44 $1,297.44 $1,295.50 Actual Amortization Period 25 Years 21 Years 20.964 Years 20.960 Years Total Interest Paid $189,249.57 $154,518.38 $153,615.95 $153,544.91 Interest savings over life of mortgage as a result of increasing mortgage payments N/A $34,731.19 $35,633.62 $35,704.66 Portion of interest savings actually resulting from making payments more frequently (i.e. not monthly) N/A N/A $902.43 (compared to monthly accelerated) $71.04 (compared to semi-monthly accelerated) Most people find that a payment frequency tied to how often they earn their income makes the most sense. And where possible, increase your regular payment amount or make periodic lump sum payments as both will help reduce the length of time it will take to repay your mortgage fully.
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95% FINANCING NOT JUST FOR FIRST TIME BUYERS You don't have to be a first time buyer to buy a home with 5% down. There are no price restrictions under the 5% down program. See the Article on 95% Financing.
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CASHBACK OR DISCOUNTED RATE? Make sure you check out the numbers before deciding that a cashback is the best way to go. While some cashbacks are as good as a rate discount, not all are. They can be advantageous to those needing the additonal cash to cover closing costs or other debt. Keep in mind that a cashback is simply another way to package a rate discount and for the average person trying to figure out which is a better deal can be very confusing. If the cashback does prove to be a better deal, it really only is if the cashback funds are immediately paid down on the mortgage or if you need the cash for some other purpose. Remember too that the contract rate on your mortgage will be higher, and as a result so will your payments. Get help to figure it out before you commit to either.
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MOST CANADIANS PAY A HIGHER INTEREST RATE on their mortgage renewal than they should! Most lenders send out their mortgage renewal notices offering existing clients the POSTED interest rates. Frequently mortgage clients assume the rate they are being offered is the best one they can get and never investigate the possibility of a lower interest rate elsewhere. The result is that many Canadians pay a much higher interest rate on their renewing mortgage than they need to. See the Article on Transfer or Switch Mortgages.
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IN A DECLINING REAL ESTATE MARKET holding off on selling your property and buying a new one is not always necessary. How can that be? Well consider these numbers that use a 15% drop in house values over a one year period. Value... One Year Ago Today Price Difference Your Home $300,000 $255,000 $45,000 New Home A $350,000 $295,500 $52,500 New Home B $400,000 $340,000 $60,000 While your home may have dropped in value, so did that higher priced house you had your eye on. As the saying goes 'it's all relative'. When you sell for less you are usually also buying for less.
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PROPERTY TRANSFER TAX YES OR NO? One of the conditions for exemption under the Property Transfer Tax Guidelines is that 'you can never have owned a principal residence any where, at anytime'. Note the guidelines refer to a principal residence. If you have previously owned real estate, whether recreational, rental property or whatever, you may still be exempt from paying Property Transfer Tax - AS LONG AS YOU HAVE NEVER OWNED A PRINCIPAL RESIDENCE PREVIOUSLY. See the Article on Property Transfer Tax.
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There are many more resources in the Full Article Listing that may be helpful, such as: Frequently Asked Questions and Glossary of Terms. Information subject to change without notice.