Say Goodbye To Your Mortgage Faster

According to a recent survey, one in four Canadians over the age of 50, who have at least $100,000 in assets, retired with some form of debt. Nearly 25% had a mortgage on their principal residence and 28% said they took on more debt after retirement. Scary. Today I wanted to talk about how you can own your home faster and save money in the process. Why? So you can retire debt free and focus on doing the things you want to do. No matter what type of mortgage financing you are looking for, it makes sense to speak to me first.

Strategy #1
Increase the frequency of your payments
If you’re paying your mortgage on a monthly basis, switch your payments to bi-weekly. As a result, you will actually make 26 payments a year. This will help you save money and reduce your amortization.

Strategy #2
Take advantage of increased payment options
TD Canada Trust customers can increase their payments by up to 100% of their regular payment amount at any time throughout the term of the mortgage. You may be suprised by how easy it is to adjust your lifestlye to a slight increase in your mortgage payments.

Strategy#3
Take advantage of lump sum payments
In Addition to increased payment options, TD offers you the opportunity to make lump sum payments on your mortgage for up to 15% of your original mortgage amount per year on a closed term. Annual bonuses or tax refunds provide great oppotrunities to take advantage of this option. Even an annual lump sum payment of 2% will make a huge difference.

Strategy #4
Take a shorter amortization
In addition to the strategies above, you may choose to shorten your amortization from 25 years to 10, 15 or 20 years instead. The result is a slightly higher mortgage payment but significant interest savings over time.

Strategy#5
Pay the same amount
For those of you who decide to take on a variable mortgage, adjust your monthly payments to what you would pay if you were on a fixed term mortgage. The result? Even more interest savings!

Sincerely,
Josephine Ng
www.tdmortgage.wordpress.com

Home Budgeting

According to a recent study, Canadian household debt has climbed to a record 145% of income, from around 95% 20 years ago, and could exceed U.S. levels in the next three years. This is an average Canadian household debt of $96100. Personal debt is obviously an increasing problem with the study showing a 50% increase in mortgages running 90 days or more in arrears and a 40% increase in credit card holders who were behind at least three months in their payments.

Amid what seems like an uncertain economy and rising interest rates, I think we all can agree that it is our responsibility to go back to the basics, and that is Budgeting. Managing a monthly budget can be difficult and frusterating, especially since money is a sensitive topic and a common cause for arguments. One of the most important aspects of controlling your budget is to determine where your money is going. By establishing a worksheet, a budget can help you determine:

• Where your money comes from
• Where your money goes
• How much is left over for you to save

By completing a budget, you can review what expenses you currently have and perhaps how to make some small changes to free up extra savings. Please review the caluculators below to get you back on track. And remember, no matter what type of mortgage financing you are looking for, it makes sense to speak to me first.

Home Budget Calculator

Cashflow Worksheet

Sincerely,
Josephine Ng
www.tdmortgage.wordpress.com

New Mortgage Rules take Effect Today

Hi Everyone! The new federal mortgage rules implemented two months ago starts today. Heres a quick run down of the key points…

Qualifying Rate
All borrowers must meet the standards for a five-year, fixed-rate mortgage, even if they choose a variable mortgage with a lower rate or a shorter term. What does that mean from TD’s standpoint? Home Equity Lines of Credits, Fixed Rate Mortgages of terms less than 5 years and all Variable Interest Rate Mortgages will be adjudicated based on the greater of the 5 Year Bank of Canada Benchmark Rate, or the actual customer rate (inclusive of customer discretion). So if you qualified for a $250,000 variable rate mortgage with a qualifying rate of 3.84% and today the qualifying rate has changed to 5.85%, this means that your income needs to be roughly 25% higher today than it was before. The 5 year Bank of Canada Benchmark rate is defined at the chartered bank – conventional mortgage 5 year mortgage rate, published by the Bank of Canada each Monday. To find the 5 year bank of Canada benchmark rate, click here.

Refinances
The maximum Canadians can withdraw when refinancing their mortgages drops to 90 per cent of the value of their home, from 95 per cent. Second homes now qualify for high-ratio insured financing if they have no more than one unit.

Rental Properties
Buyers must make now a minimum 20 per cent down payment, up from five percent, to qualify for CMHC insurance for non-owner occupied properties purchased as an investment.

Key Interest rates (April 19, 2010)
Qualifying rate = 5.85%
TD Prime = 2.25%
Next BOC meeting = April 20, 2010

No matter what type of mortgage financing you are looking for, it makes sense to speak to me first. I am available outside of normal banking hours, weekends and evenings to suit your schedule. Thank you!

Sincerely,
Josephine Ng
www.tdmortgage.wordpress.com

10 Steps Of The Homebuying Process

Starting the journey to home ownership can be very overwhelming and stressful. In fact, research shows that even women in fairly strong financial positions tend to be more stressed and less confident than men when it comes to home buying, according to Genworth. But with a little planning, you can find the home that’s right for you. A home that provides you with a balance between your “wish list” items and the practical realities of the property. Soon enough, you will have a place to call your own. To help you keep on track, here is a step by step guide to buying your first home.

Step 1 – Build a budget
Step 2 – Investigate your mortgage options
Step 3 – Choose a Realtor
Step 4 – Get a lawyer
Step 5 – House Hunting
                  a) Create a wish list
                  b) Bring your checksheet
Step 6 – Make the Offer
Step 7 – Home Inspection or New Home Warranty?
Step 8 – Finalize the Deal
Step 9 – Moving Preparations
Step 10 – Closing Day

To help first time homebyers be better educated to make informed home ownership decisions, Genworth has launched National Home Ownership Education Week from April 12-16. Please visit www.homeownershiphelp.ca to find the facts and tools to help you make more informed decisions on your next home purchase.  No matter what type of mortgage financing you are looking for, it makes sense to speak to me first.

Sincerely,
Josephine Ng
www.tdmortgage.wordpress.com

Original Article from Genworth

Additional Costs to Consider when Purchasing Your Home

Have you ever wondered what other costs are associated with purchasing a home? What are closing costs and how much should you set aside? Closing costs are the legal and administrative fees and disbursements associated with buying your home. They usually range anywhere between 1.5%-4% of the purchase price of your home. Understanding these costs will help you budget more accurately and lead to a more comfortable home buying experience…and hopefully leave you with enough to buy that furniture you always wanted. These costs can include:

• Land Registration Fees
• Legal/Notary Fees
• Fire Insurance
• Home Inspection
• Moving Costs
• Utility Service Hook Ups

Please click on the link below to get more detail on each type of fee.

Additional Costs to consider

Sincerely,
Josephine Ng
www.tdmortgage.wordpress.com

Cash-back Mortgages

This afternoon I met with a client to finalize his mortgage and like any mortgage conversation started talking about the competition. This time it wasn’t about the beating of fixed rates but rather a much debated product…cash-back mortgages. When he told me that CIBC was offering 2% cash-back on a 3 year term with an interest rate of 3.3%, I raised my eyebrow. Not because I didn’t believe him but because of the fact that now I will be faced with more conversations explaining to my customers what “the catch” is with these types of mortgages. Before I continue, the offer from CIBC is not what it is. It seems they are giving consumers 2% cash back and a mortgage rate of 3.99% on a five-year rate if they switch their existing mortgage from another financial institution to CIBC.

So what is a cash back mortgage? Cash-back mortgages give you a percentage of your mortgage in cash when it funds.  It can be used for things like furniture, closing costs, or whatever you want. The catch? You’ll usually get the posted rate instead of a discounted rate. So what’s the difference in interest on a $300,000 mortgage for a 5 year term? About $22,000! If you are getting $15,000 in cash back, you will pay another $7000 to the bank. And what happens if you sell your house before the 5 year term is up? Along with the usual fees associated with breaking a mortgage early, some or all of the cash-back may have to be paid back. With most people still choosing the fixed 5 year fully discounted rate or 5 year variable closed rate, there is still a small percentage of people that choose a cash-back mortgage because they do have benefits.

For example, first time homebuyers who may not have enough to buy furniture or do upgrades may want to take out a cash back mortgage instead of using their credit cards to make their purchases. Paying an interest rate of 5.25% interest sounds a lot better than paying 21%. Also, there are some lenders that will allow homebuyers to apply the cash back to their down payment to help come up with the necessary 5%. At the end of the day, there are better ways to get the 5% so you can get better rates. No matter what type of mortgage financing you are looking for, it makes sense to speak to me first.

Original article from Financial Post

Hello world

Finally got around to start up a weekly blog on the latest and greatest on the financial front. Visit me over at tdmortgage.wordpress.com and sign up for the weekly news letter that will be fun and informative.