Are US Mortgage Brokers Giving Canadians a Bad Name?

For many homeowners, paying off their mortgage as quickly as possible is a top priority. Paying down extra principal in the early years by whatever means possible can shorten the life of your mortgage – and dramatically lower the interest you'll pay over the long haul. Here are a few tips on how to make this happen:

1. Increase your payment annually to the most you can afford
The upside is that most lenders will allow you to reduce it again to the previous level if it turns out to be too great a burden or your circumstances change.

2. Prepayments give great return on investment
If, for example, you pay an average of 6.0% in mortgage interest, for each $1,000 by which you reduce your mortgage principal, you will save $60 in after tax cash every year.

3. Make use of your RRSP-driven tax rebate as a mortgage prepayment method
Even if you can only prepay annually, make sure tax refunds are set aside for paying down your mortgage. Many Canadians borrow (at prime) to buy an RRSP to ensure the maximum rebate. When applied to the mortgage principal, this refund is a "gift that keeps on giving". Combining the refund with the tax-free interest earned on the RRSP over the subsequent years will quickly outpace the short-term interest costs of the RRSP loan.

4. Increase the frequency of your payments
Make accelerated bi-weekly payments to get a "free" principal reduction equivalent to one full mortgage payment every year — painlessly.

It pays to have a mortgage reduction strategy in place. Call me today for expert advice on how to pay off your mortgage sooner.


Rick Moran, AMP, OMB # M08001997

Money Saving Tips on Paying Off Your Mortgage Faster – Part 2

Last week I noted that homeowners have much to gain by paying off their mortgage as quickly as possible. By paying down extra principal in the early years of a mortgage, you can dramatically lower the interest you’ll pay throughout the life of the mortgage. Here are some additional tips on how to make this happen:

5. Make use of double-up privileges wherever possible
Tell yourself that you will "skip-a-payment" whenever necessary... then skip only when you absolutely must.

6. Round your payments up
By adding even a nominal amount of say, $10 per payment, the amount of interest you are saving will be unbelievable, and the extra money is relatively painless to part with.

7. Pay a lump sum whenever possible
By decreasing the principal of the mortgage, your payments will not be allocated as much to interest, thereby accelerating the end of your mortgage.

8. Keep payments the same when mortgage rates have fallen
If the payment amount has not been a problem so far, then keep it the same, thereby paying down the principal faster.

9. Raise payments in line with increased income on an after-tax basis
If your income increases, don't keep your mortgage payments the same. Although the disposable income may be fun to spend on unnecessary luxuries in the short-term, the long-term benefits of being mortgage free faster a far outweighs the short-term sacrifice

If there are any other related issues that you would like to discuss, I would welcome a call at (416) 418-8614

Rick Moran, AMP, OMB # M08001997

Money Saving Tips on Paying Off Your Mortgage Faster – Part 1

For many homeowners, paying off their mortgage as quickly as possible is a top priority. Paying down extra principal in the early years by whatever means possible can shorten the life of your mortgage – and dramatically lower the interest you'll pay over the long haul. Here are a few tips on how to make this happen:

1. Increase your payment annually to the most you can afford
The upside is that most lenders will allow you to reduce it again to the previous level if it turns out to be too great a burden or your circumstances change.

2. Prepayments give great return on investment
If, for example, you pay an average of 6.0% in mortgage interest, for each $1,000 by which you reduce your mortgage principal, you will save $60 in after tax cash every year.

3. Make use of your RRSP-driven tax rebate as a mortgage prepayment method
Even if you can only prepay annually, make sure tax refunds are set aside for paying down your mortgage. Many Canadians borrow (at prime) to buy an RRSP to ensure the maximum rebate. When applied to the mortgage principal, this refund is a "gift that keeps on giving". Combining the refund with the tax-free interest earned on the RRSP over the subsequent years will quickly outpace the short-term interest costs of the RRSP loan.

4. Increase the frequency of your payments
Make accelerated bi-weekly payments to get a "free" principal reduction equivalent to one full mortgage payment every year — painlessly.

It pays to have a mortgage reduction strategy in place. Call me today for expert advice on how to pay off your mortgage sooner.


Rick Moran, AMP, OMB # M08001997

Real Estate Industry Predicts Stronger Market due to Increased Demand and Lower Interest Rates in 2011

The average price of a home in Canada increased between 3.9 and 4.6 per cent in the fourth quarter of 2010, compared to the previous year, as markets shrugged off a lackluster third quarter and returned to a post-recession growth profile.
Home values are forecast to continue a moderate and steady climb in many of the country's key housing markets through 2011 with sales activity skewed to the first half of the year, according to the Royal LePage House Price Survey and Market Survey Forecast released today.

Phil Soper, president and chief executive of Royal LePage Real Estate Services says, "2011 is expected to unfold much like 2010, when close to 60 per cent of sales volume occurred in the first half of the year in anticipation of interest rate increases that never materialized. However, housing market activity in the first half of 2011 will be modestly closer to the norm, as last year's phenomenon was exacerbated by mid-year tightening of mortgage accessibility and the introduction of HST in Ontario and British Columbia."


Rick Moran, AMP, OMB # M08001997

REACTION TO MORTGAGE RULE CHANGES

Yesterday, Jim Flaherty announced changes to mortgage rules that will take effect on March 18. Following is my reaction to these changes:

Many industry leaders say that the changes announced were a measured approach to balance the Canadian real estate market, scale back consumer debt loads and reduce the looming threat of personal financial crisis for Canadians who would be in danger if rates increase the next few years. I believe that this is an overreaction, however the fact remains that the best advice continues to come from the expert Mortgage Broker.
I do predict that some sales will be pulled forward over the next 60 days as serious buyers close deals to preempt the changes ahead of the March 18th deadline.

Rick Moran, AMP, OMB # M08001997

The Yummy Mummy Club "Mummies Do Rule" By Rick Moran

The Yummy Mummy Club is housing an article of mine entitled "Mummies Do Rule." Please feel free to read on or visit The Yummy Mummy Club's original post here.

The other day my partner (also my wife and a yummy mummy member) and I had a lively discussion surrounding the majority of the couples that we assist all year long (I head a team of Mortgage Consultants in the greater Toronto area).

Janice stated that she had done some research, looking into the thousands of people that we have assisted over the years. Her claims initially surprised me, that is, until I began to do my own research. I began to read, search and compile verifiable data and I made the most interesting discovery.

Over half of Canadian women say that they are responsible for most of the day-to-day financial decisions, according to MasterCards 2010 MasterIndex of Canadian Women Consumers. More than half of those enjoy their role as the primary decision maker.

The report examined the role of women over the age of 18 in Canada as well as looking at the effects of the global recession on consumer behaviour. "The recession was a financial marathon, but Canadian women emerged leaner, stronger and more financially satisfied," says Julie Wilson, Director, Public Affairs in a press release, "They are more confident in their financial situation. They are still spending, but they are now dollar-store chic."

Although the number of women who are responsible for the day-to-day household financial decisions was down to 51 percent from 2006's 55 per cent, more Canadian women enjoy that responsibility. Moms are the ones most likely to have the sole responsibility of day-to-day finances in their home, the study found. More specifically they are making the principal Mortgage Decisions.

Six in ten Canadian women are satisfied with their personal financial situation, with only 14 percent being very satisfied. This number is up from 54 percent in 2006.

Six in ten Canadian women are savers. Their stage of life often dictated how women spend their money. Over seventy per cent of Canadian women say that a good price is the most important factor when they are shopping for themselves and their households. For “New Earners”, brand name is a bigger consideration for moms when it comes to buying for themselves.

That data reverses when it comes to buying household items. The 2010 research was conducted by Environics Research Group from July 22 - August 4, via a national online survey of 2,000 adult Canadian women aged 18+.

Upon discovering this most interesting and verifiable phenomenon, I assembled the “team” and we began a review of over a thousand of the families that we have arranged Mortgages for over the past 10 years. In fact in our experience, over 64% of the ladies have made the final mortgage decision.

I humbly expressed my apologies to all of the girls involved on our team, and I surrender…Mummies do rule.