May 2010

This article is provided by Brian Marling of Neighbourhood DLC – Canada’s #1 Mortgage Team  905.372.7222

We continue to benefit from one of the best mortgage environments in history. Take a look at the interest rates on mortgages these days. Now look at what you’re paying on your credit cards and other debts. You can actually power down your debt load faster by pulling together your credit cards, car loans or any other high-interest debt and rolling everything into a new or existing mortgage. This can be a great money-saving strategy (see illustration below).  The benefits of pooling your debt are immediate and long-lasting: improved cash flow; fewer payments; a brighter credit picture; and big savings on your overall interest costs. If you have equity in your home, there is no reason to be holding large amounts of high-interest debt. The right refinancing package can help put an end to the monthly squeeze of too much credit card debt or too many loans.

Unfortunately, the stress that can be created from debt in a marriage, or family, ends far too often in relationship break-up. Allow an expert like myself to evaluate your situation before it is too late.  I can assess your situation if you are worried about penalties associated with breaking your current mortgage. The savings each month often far outweigh any penalties. You can either use these savings to ease your monthly cash flow or apply some of it to hammer down your debts faster than you thought possible. For instance, if you put $450 of that cash flow into your mortgage payment, you’ll reduce your amortization from 25 to 15 years!  As always, I’m just an e-mail or phone call away if you want to discuss debt management or anything else!

W hat can you do if the relationship is already in the process of dissolving?  We all know that marriage isn’t always forever. And when a separation occurs, a home is often involved. Since most couples have a joint mortgage – one where both names are on the mortgage and title of the home – when separation or divorce proceedings occur, many wonder what will happen with the home. When the marriage comes to an end, there are two obvious options concerning the home: 1) sell the property and split the proceeds according to your agreement and go your separate ways; or 2) one person buys the other party out of the mortgage and the title of the property.  The first option is a straight-forward transaction where you put the house up for sale, sell and split the proceeds. The second option, however, is slightly more complicated.

The decision between the options is a personal one borne out of the specific circumstances of the parties involved. Perhaps there are young kids involved that need to stay in the house, the market is down and there will be a loss on the property that neither party can afford, one party can afford to buy the other party out, etc.

Once the decision is made, how do you go about buying the other person out of a mortgage?  Well, essentially, you are refinancing your mortgage using a single income (the person who is buying the other party out of the house) and qualification, versus the original purchase, which was based on joint income and qualification. 

If you are the one buying your partner out, the first step is to ensure that you can afford the mortgage payments. This is imperative because the lender will ask for proof that you are capable of covering the mortgage in order for you to apply on your own. In addition to covering the mortgage amount, you will have to come up with whatever dollar amount you have agreed on to buy the other partner out. This may come out of the equity in your home if it’s sufficient.

In essence, if you can afford the mortgage on your own, the most common means of buying out your partner post-separation and transferring title out of the joint name and into your name, is to refinance. I can help you through each step of this process. If you are not in a financial position to buy your ex-partner out of the house, and you agree to both stay on title and have payment arrangements, there is one warning to be taken very seriously. Just because one person is responsible for the payments (even with a court order), if the mortgage goes into default, both parties on the mortgage will be affected.

The most important piece of advice when dealing with a mortgage during a separation is to become informed. Know your options, talk to professionals about your options, and make an informed decision regarding your home and mortgage.

Here at Neighbourhood, & the home of the Brian Marling Mortgage Team, we are concerned for the total well-being of our clients. That’s why we are taking the years of experience from our award winning office and offering a series of  FREE Seminars to our clients and their friends & families and to the public at large. The seminars, entitled ‘Financial Fitness’, will be offered free of charge and will cover all the secrets of successful personal financial freedom. If interested please call our office at 905.372.7222 to reserve your spot as seating will be limited.

June 2010

This article is provided by Brian Marling of Neighbourhood DLC – Canada’s #1 Mortgage Team  905.372.7222

Blondin was a world famous tight-rope walker in the early 20^th Century. One of his more famous feats was a walk across Niagara Falls. When he arrived at the other side, as the story goes, the crowd naturally went wild with cheers and applause as they chanted his name, “Blondin! Blondin! Blondin!”.   Blondin, being a great showman, played to the crowd as he asked them , “Do you believe I can make it back across to the other side?”  The crowd went nuts and yelled “Yes,Yes”. “This time”, he said, “I am going to carry someone on my back. Do you believe I can do it?”.  At this point the crowd went into a frenzy with their positive affirmations as they couldn’t wait to see it.  Blondin then shouted to the crowd, “And who will be that person?”.  Of course the crowd became uncomfortably quiet.

Not many of us can walk a tight-rope, certainly not across Niagara Falls. However, when it comes to our finances it seems that many have risen to the occasion and quite enjoy performing the High-Wire Act. In fact, recent statistics have indicated that Canadians on average have a debt-to-disposable income ratio of 1:145. This means that for every $1.00 of disposable income we are spending $1.45. How is that even possible!! Enter the wonderful & mysterious world of banking, credit cards, buy now pay later, you deserve it all, blah,blah,blah.  Now that we are in this mess, how does one get out.?

At the risk of sounding repetitive, which is necessary until one ‘gets it’, there are a few simple secrets that I will share with you now.  From a philosophical viewpoint, which is a necessary starting point, I borrow from one of our Ancient scripts which says that the starting point is to be content with what you have. What a simple yet powerful thought.  Perhaps easier said than done especially in a culture which constantly tries to make us feel inferior if we do not have the latest, greatest, fastest, bestest whatever!  However, regardless of whatever the cultural message is, it is a choice we make to be satisfied or not. So then the starting point must be Contentment. Which is not to say that we shouldn’t strive for a better quality of life or that it’s somehow wrong to desire nicer things in life, but if we aren’t first of all content & happy where we are then it is unlikely that more will make us so. This point was driven home to me once again when I went down to Victoria Park earlier this week to watch the Watoto African Children’s Choir. What an inspirational display of the wonder of the human spirit. Here is a group of orphaned children whose parents mostly died of AIDS displaying the most amazing joy I have seen in a long time. What a tremendous personification of peace and contentment I witnessed. Yet who could have more reason to be discouraged, dismayed or disillusioned with life. Clearly they have chosen a different path and have obviously learned the first secret of contentment, while at the same time striving for  a better life. Not only did I find it inspirational but it also helped me to gain perspective once again.   

Next is to be aware that how much we earn is not as important as what we do with it. That is why the 70/30 Principle works no matter what your income is. What is the 70/30 Principle?  It is the next secret to successful living. The 70/30 principle goes like this: divide your after tax income into 2 parts – 70% in one pool and 30% in another. There are 3 parts to the 30% pool:  10% must go into savings, 10% must go into some kind of investment, and 10% must be given back to your church or favorite charity.  The 70% pool is for everything else – rent/mortgage, food, clothing, insurance, etc.  If you commit to this plan you will create real wealth in your lifetime. The challenge is deciding to live differently than you have been unless of course you have already arrived.

“But I’m barely paying my bills now and almost always run out of money before the end of the month.”, you say.  My response – how is that working for you? Perhaps now is the time that you decide to live differently. The concepts I have shared above are simple to follow. But I never said it would be easy. If you want what most people have then continue to do what most people do. But if you truly desire change then it must start with you. 

Here at Neighbourhood not only do we provide Award Winning Service and the best selection of mortgage products in the country, but we also provide our Free Financial Fitness Seminars and have also added Personal Financial Coaching for those who truly desire a change but would like some assistance along the way. If you don’t change something then don’t expect different results.  As always you can call us anytime to discuss how we may be able to help you.

Here at Neighbourhood, & the home of the Neighbourhood Mortgage Team, we are concerned for the total well-being of our clients. That’s why we are taking the years of experience from our award winning office and offering a series of  FREE Seminars to our clients and their friends & families and to the public at large. The seminars, entitled ‘Financial Fitness’, will be offered free of charge and will cover all the secrets of successful personal financial freedom. If interested please call our office at 905.372.7222 to reserve your spot as seating will be limited.

July 2010

This article is provided by Brian Marling of Neighbourhood DLC – Canada’s #1 Mortgage Team  905.372.7222

Last month I shared with you an historic opportunity to better your personal finances, and predictably there are many who could have taken advantage but haven’t  yet. Although interest rates have started to creep up in recent weeks, rates and property prices remain on the low side, making now an ideal time to purchase a home, vacation or rental property, or refinance your mortgage to access equity in your current home to do some renovations, consolidate debt or put towards your children’s education.

To give you an idea of the savings you could capitalize on in the current market, following is an example of a home that cost $250,000 in November 2008 (just months ago) and what it’s worth now, as well as the average change in interest rates, and total savings based on a 25-year amortization:

Using the above example, you would have saved $113,000 in interest payments alone over 25 years. Imagine the comparison using a higher-end home as an example.

When does it pay to break your mortgage?

If you’re considering refinancing your current mortgage to take advantage of lower rates, your mortgage professional can determine if this will benefit you long term. In some cases, the penalty can be quite substantial if you aren’t very far into your mortgage 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.

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.

By refinancing now and paying off your debt, you can put yourself and your family in a better financial position.

Paying your mortgage off faster

It’s important to also keep in mind that by refinancing you may extend the time it will take to pay off your mortgage. That said, there are many ways to pay down your mortgage sooner. 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 change the way you make your payments by opting for accelerated bi-weekly mortgage 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.

If, for instance, you have a $100,000 mortgage, an interest rate of 5% and an amortization period of 25 years, your monthly mortgage payment would be $581.60 and your total payments for a year would be $6,979.20 ($581.60 x 12).

To understand the savings accelerated bi-weekly mortgage payments can make, take the monthly mortgage payment of $581.60 and divide it by two ($581.60 ÷ 2 = $290.80).  Next, take that payment and multiple it by 26 to arrive at your total payments for the year ($290.80 x 26 = $7,560.80).

As you can see, by using the monthly mortgage payment plan, you’ve made payments totalling $6,979.20 for the year, while using the accelerated bi-weekly mortgage plan you’ve made payments totalling $7,560.80 – a difference of $581.60. 

Using this example, you would reduce the amortization on your $100,000 mortgage from 25 years to just over 21 years and your total savings on interest over the life of the mortgage would be just over $12,000.

Here at Neighbourhood not only do we provide Award Winning Service and the best selection of mortgage products in the country, but we also provide our Free Financial Fitness Seminars and have also added Personal Financial Coaching for those who truly desire a change but would like some assistance along the way. If you don’t change something then don’t expect different results.  As always you can call us anytime to discuss how we may be able to help you.

Here at Neighbourhood, & the home of the Brian Marling Mortgage Team, we are concerned for the total well-being of our clients. That’s why we are taking the years of experience from our award winning office and offering a series of  FREE Seminars to our clients and their friends & families and to the public at large. The seminars, entitled ‘Financial Fitness’, will be offered free of charge and will cover all the secrets of successful personal financial freedom. If interested please call our office at 905.372.7222 to reserve your spot as seating will be limited.

January 2010

This article is provided by Brian Marling of Neighbourhood DLC – Canada’s #1 Mortgage Team  905.372.7222

With the high cost of holiday gift-buying and entertaining now behind you, this may be the perfect time to get the New Year off on a positive note by refinancing your mortgage and freeing up some money to pay off that high-interest credit card debt.

It’s amazing how many people still do not understand the relationship between their various financial obligations and how important it is to have them structured properly. Interest (especially compounding interest) is a very powerful force that is either working for you or against you – which is it for you?? An analysis of your overall financial picture including all assets and liabilities can tell quite a tale in most cases, and often my clients are amazed at the immediate positive difference a restructuring of their debt can have on their monthly bill payments and overall financial health.  Just this week we had another great ending to a client consultation where we were able to restructure a clients finances with the net result being a positive monthly increase in cash of $1,500, all high interest debt eliminated and on the road to paying off their mortgage sooner!!

Sound too good to be true?  Not at all…it’s just about the numbers.  In most cases there will be a penalty to break your current mortgage, but don’t get hung up on that. If it makes sense financially then guess what – It’s All About The Numbers – and the numbers don’t lie! The amount of the penalty is absolutely irrelevant as long as the end result is a better over-all financial position. 

One of the great things about taking advantage of an independent Mortgage Professional, like myself,  is that we do not work for the lender but for you. Therefore, if I can restructure your finances and place your mortgage with a different more favourable lender what difference does it make who the lender is?  Loyalty is one thing, but mis-placed loyalty is another. In other words, no one should be more concerned about your financial well being then you are, which means at the end of the day it shouldn’t matter to you who is holding your mortgage as long as it is benefitting you financially. Another area for comparison, and in order to make my point, is the whole topic of buying gas for your car. Don’t most of us buy it where we can get the best deal since it is the same product everywhere?  But what if I told you that you could buy it for 8-10 cents cheaper per litre than the lowest price available every time you filled up, and it wouldn’t mean spending any more than you already spend. Call me & I’ll tell you how.  The point is, once again, that you ought to be the person most concerned about your own financial well being. Your loyalty should lie with what’s best for you & your family.

You may find that taking equity out of your home to pay off high-interest debt associated with credit card balances can put more money in your bank account each month.

And since interest rates are at “emergency” levels – low rates never before seen by your parents and even your grandparents – switching to a lower rate may save you a lot of money, possibly thousands of dollars per year.

Once again I would like to stress, as I have been doing this past year, that these “Emergency Rates” will not last forever. Now is the time to take action and avail yourself of an opportunity that you probably will never see again. If your current mortgage interest rate is anywhere near 5% or higher then you need to call me before your opportunity is gone. The question is not if rates are going to rise, but when.

With access to more money, you will be better able to manage your debt. Refinancing your mortgage and taking some existing equity out could also enable you to make investments, go on vacation, do some renovations to take advantage of the Home Renovation Tax Credit that expires February 1^st or even invest in your children’s education.

If homeowners fail to take the time to thoroughly research their options through a mortgage professional and, instead, simply sign renewal offers received from their bank, credit union or other lender, they could end up paying thousands of dollars more per year in interest. Simply by shopping your mortgage with a qualified mortgage professional, you can access the banks as well as other lenders that you may not have considered, but which can often offer interest rate specials or other attractive terms.

By refinancing now while rates are still low and paying off your debt, you can put yourself and your family in a better financial position. Hopefully, if we have learned anything in the past year and a half as far as our finances is concerned, it is that nothing is for certain. Please take the time to call me and I will make sure that our time spent together is profitable.  And don’t forget to ask me about our Cheap Money Strategy that we are employing with many of our clients right now.

February 2010

This article is provided by Brian Marling of Neighbourhood DLC – Canada’s #1 Mortgage Team  905.372.7222

Question: What do the following have in common: driving a vehicle worth more than your annual gross income; paying 20% or more on credit card balances while the cash to pay them off sits in a “savings” account paying you next to nothing; buying a home which requires both incomes to service and which also puts you at the maximum as far as debt ratios go; etc, etc, etc.??  Answer: DUMB financial decisions.

I’m not trying to intentionally insult the reader of this article, but if the shoe fits…  It only takes a little superficial observation to figure out that there are a boatload of people making and being enticed to make poor financial decisions all the time. Have you seen the number of payday loan type operations popping up everywhere? These are places that basically sell you your future-not-yet-earned income and charge you a hefty fee to do it. And the ones who are partaking seem to be the ones who can least afford to do so. If you are already struggling to make ends meet, then how does this help?  Or what about those You-deserve-it-now-why-wait establishments that will happily let you pay several times what an item is worth so long as you have a pulse and can sign on the dotted line? I could go on with a myriad of examples in the same venue but I believe I have made my point.

And the point is this: in a consumption based economy you will always be tempted to overspend and be made to feel good while you are doing it.

Part of the problem, in my opinion, is that it is extremely difficult to wait for almost anything in a culture which measures time in nano seconds! Combine that with the easy availability of credit (i.e. they will give you just enough to hang yourself) and it’s no wonder that people are in the financial mess that they are in. I often share with my clients a simple illustration to make the point that debt can become a life-long slave master… I show them that a small credit card balance of $500 with an 18% interest rate will take over 7 years to pay off if only minimum payments are being made!! It doesn’t take a rocket scientist to then figure out that you will likely never get out of debt if your debt load is more significant and in the neighbourhood of $15, 20 or 30 thousand dollars of consumer debt and making only minimum payments.

So what is at the root of our bad financial decisions? Unfortunately, this article alone could not begin to address the long list of possible culprits which could include everything from greed to ignorance. Not to mention that we really have never had any sound teaching in our schools on a subject so important as personal financial management. But why not? We’re not all going to be Dr’s, or Engineers, or whatever… but we will all be the CEO’s of our own families and required to make important financial decisions. So if we’re not taught in school or our parents didn’t do a good job in this area, then how do we manage? My answer – not very well. Especially when you realize the current Canadian statistic which tells us that average Canadians have a 1.40 debt to disposable income ratio. Meaning that for every dollar of disposable income that we have, we have $1.40 worth of debt. What’s wrong with this picture?! When will we end the insanity?

As referenced many times in past articles our parents & grandparents didn’t seem to have the same debt issues. Primarily, I believe, because they did not ransom their futures for temporary pleasures which they couldn’t afford. Also, credit in the form of plastic just wasn’t as available, or not available at all. Therefore they lived by different creeds such as, “Save until you can afford it”, “Live within your means”, and other such foreign concepts. And the results of such archaic concepts? Well take my parents for example: never earned much more than $45K per year combined but currently live in a mortgage free home, drive a payment free new van, have investments in the bank and do not need to rely on government or anyone else. All on $45K per year – cudos Mom & Dad. And thanks for the example.

Here at Neighbourhood, & the home of the Brian Marling Mortgage Team, we are concerned for the total well-being of our clients. That’s why we are taking the years of experience from our award winning office and offering a series of  FREE Seminars to our clients and their friends & families and to the public at large. The seminars, entitled ‘Financial Fitness’, will be offered free of charge and will cover all the secrets of successful personal financial freedom. If interested please call our office at 905.372.7222 to reserve your spot as seating will be limited.  Together we can turn Uncommon Cents into common sense and begin to head down the path of financial well being.

August 2010

This article is provided by Brian Marling of Neighbourhood DLC – Canada’s #1 Mortgage Team  905.372.7222

The answer to the question of whether to use any excess cash for investments or debt repayment seems to go back & forth on a regular basis. However, the scale seems to be tipping in one direction since the financial crises hit in the fall of ’08.

Hopefully if we learned anything from the past couple of years it is this – there is no such thing as a sure thing when it comes to investments.  So, what to do? Invest or repay debt? Perhaps this excerpt from a recent Toronto Star Article will help shed some light for you…

Canadians are learning to save more, invest more conservatively and de-risk their retirement account. So, despite what your personal conclusion might have been last time you thought about the smack-down between RRSPs vs. mortgages, the economic equation has recently tilted in favor of paying down debts vs. building up assets, but only for those of you with low tolerance for any investment risk.

As you probably noticed, despite recent moves by Mark Carney and the Bank of Canada to nudge the numbers upward, the interest rate being earned from GICs, term deposits and government bonds remains pathetically low.

For those risk-averse savers who abhor the volatility of the stock market, money is earning 3 per cent – if they are willing to lock in for a few years—and less than 1 per cent on demand deposits and savings accounts. Hey, did you ever hear of the rule of 72? Guess how long it takes money to double if your retirement’s nest egg is earning 1 per cent per year? Yes. You guessed it. 72 years.

Do the math. If you are paying 6 per cent, 5 per cent or even 4 per cent on your mortgage – which is on the liability side of your personal balance sheet – but your financial assets are (only) earning 1%, 2% or 3%, then you are effectively destroying wealth. It’s the debt equivalent of constantly buying high and then selling low in the stock market. Once you think about for just a few seconds, you realize it’s dumb.

Here is how to think about the tradeoff between paying down your mortgage versus saving in your RRSP or TFSA. If your mortgage is costing you 5 per cent, then every dollar you don’t invest but instead use the money to pay-down debt will earn the said 5 per cent. If the debt clock is ticking at 10 per cent or 15 per cent like many credit cards, the argument for raiding your retirement accounts to eliminate the debt is even stronger.

Of course, if your investments – RRSPs and the like – are invested aggressively under the hope and expectation that they will earn more than mortgage rate you are paying or current bond yields, then you can justify not paying down your mortgage. After all, borrowing at 5 per cent makes sense if you expect to earn much more.

However, you have to be able to look yourself in the mirror and say: “Yes, I think my assets will earn more than my liabilities are costing me.” Remember, even the most delusionary deflationary pundit doesn’t forecast a 5 per cent gain on your Government bond, or GIC or cash that is only earning 3 per cent per year interest.

Don’t take my word for this. A recent article by two economists at the University of California at Berkeley made the same point, albeit with reference to a U.S. audience. They examined more than 15,000 household financial records and determined that over a quarter of those households should completely abandon equity market participation or stock ownership because of the high interest rates they are paying on their large portfolio of debts.

To quote their words in a scholarly journal called the Review of Financial Studies, “Households with high interest debt have a reduced benefit to equity participation and in many cases should not own any stocks…repayment of outstanding debt almost always yields a higher rate of return than many of the safe (investment) assets.”

This might be quite obvious to some – pay down your credit card debts, duh! – but the fact 25 per cent of their sample isn’t doing it right is downright shocking. Yet I suspect the percentages of sub-optimal behaviors might even be higher in Canada.

Many Canadians might be better-off forgoing the immediate tax deduction from the RRSP contrinution – which will eventually have to be paid back – and instead pay down their high interest debt. An even stronger case can be made against TFSA contribution, again, if your debts are ticking at high rates but you assets are growing (or even shrinking) at low rates.

Ok. Here’s the bottom line. It’s time to look at both sides of your personal balance sheet at the same time. Add up all your debts and compare the interest cost of all your liabilities against the interest you will be earning on your retirement investments, based on your current asset allocation mix between stocks and bonds.

If the former is greater than the latter, it’s time to pay down some debt and forgo the investment plan contribution. Oddly enough, not contributing to your RRSP or TFSA might make you wealthier in the long run. …

In light of the above article, and combined with current low mortgage rates, there has never been a better time to consolidate your debt and finally get on track for the future!

Here at Neighbourhood not only do we provide Award Winning Service and the best selection of mortgage products in the country, but we also provide our Free Financial Fitness Seminars and have also added Personal Financial Coaching for those who truly desire a change but would like some assistance along the way. If you don’t change something then don’t expect different results.  As always you can call us anytime to discuss how we may be able to help you.

Here at Neighbourhood, & the home of the Brian Marling Mortgage Team, we are concerned for the total well-being of our clients. That’s why we are taking the years of experience from our award winning office and offering a series of  FREE Seminars to our clients, their friends & families, and to the public at large. The seminars, entitled ‘Financial Fitness’, will be offered free of charge and will cover all the secrets of successful personal financial freedom. If interested please call our office at 905.372.7222 to reserve your spot as seating will be limited. The next Financial Fitness Seminar will be Sept 28/10.

March 2011

This article is provided by Brian Marling, Accredited Mortgage Professional, of Neighbourhood DLC – Canada’s #1 Mortgage Team  905.372.7222

Let me start off this month by stating unequivocally that I am not against purchasing new vehicles… WHEN YOU CAN AFFORD IT. Ahhh, there in lies the determining factor from my perspective – affordability.  And how is a car related to your mortgage?? Read on.

The question of whether it’s better to lease or buy a vehicle is a common dilemma. And do you buy or lease a new or used vehicle? The answer depends on the specifics of your situation.

It’s important to realize that many consumers overburden themselves with car leases or loans they simply can’t afford (despite what you were told). While most of us require a vehicle to get to and from many destinations throughout the course of any given week, we don’t need a high-end vehicle to serve this purpose. And if it’s about the new car smell, well get over it – they make spray for that now.

Leases and purchase loans are simply two different methods of automobile financing. One finances the use of a vehicle while the other finances the purchase of a vehicle. Each has its own benefits and drawbacks.

When making a lease-or-buy decision, you must, therefore, look at your financial abilities in terms of your debt ratios. And if you’re unsure about how leasing or purchasing a vehicle will affect your ratios, it’s best to call me prior to making your decision.

When you buy, you pay for the entire cost of a vehicle, regardless of how many kilometres you drive. You typically make a down payment, pay sales taxes in cash or roll them into your loan, and pay an interest rate determined by your loan company based on your credit history. Later, you may decide to sell or trade the vehicle for its depreciated resale value.

When you lease, you pay for only a portion of a vehicle’s cost, which is the part that you “use up” during the time you’re driving it. You have the option of not making a down payment, you pay sales tax only on your monthly payments, and you pay a financial rate, called a money factor, which is similar to the interest on a loan. You may also be required to pay fees and a security deposit. At lease-end, you may either return the vehicle or purchase it for its depreciated resale value.

As an example, if you lease a $20,000 car that will have, say, an estimated resale value of $13,000 after 24  months, you pay for the $7,000 difference (this is called depreciation), plus finance charges and possible fees.

When you buy, you pay the entire $20,000, plus finance charges and possible fees. This is fundamentally why leasing offers significantly lower monthly payments than buying.

Another option is to save and pay cash for a good used vehicle. Many can be purchased now for under $10,000. This is my personal preference – to own outright with no payments. I have better things to do with my money than make payments on a depreciating so-called asset that will always lose money and never recoup the original cost.

What does this have to do with my mortgage?

One of the keys to remember when you’re looking to purchase a home and obtain a mortgage or refinance an existing mortgage is that, if you overspend on a vehicle, it affects your debt ratios and may restrict or negate your mortgage financing ability. I have seen this numerous times where people have simply overspent on vehicles. If your gross income is $35 or $40 thousand a year, why would you be driving a vehicle that costs $40-45 thousand dollars?? Does that make any sense at all? Long after the thrill is gone those $500 dollar payments just keep on comin!

And here is where it really costs you…it’s called opportunity cost. Because you have overspent on vehicles you may be unable to take advantage of todays awesome mortgage rates because your TDS (Total Debt Servicing ratio) is too high.. All of your debt payments go into the mix when lenders look at financing or re-financing your home. Depending on your gross income and the amount of equity in your property, if your car payments are too high they may be keeping you from much better mortgage rates which would possibly save you thousands in interest costs.

These are the kinds of things we discuss on a daily basis with our clients – hopefully before mistakes are made. As Mortgage Professionals we care about your entire financial picture and offer expert advise designed to help you become debt-free as soon as possible and on your way to creating real wealth.

Because Neighbourhood DLC is Canada’s Largest Mortgage Team, we can offer you the absolute best products, service, advice & pricing. Call me today, Brian Marling 905-372-7222 for a Personal & Private consultation.

Here at Neighbourhood not only do we provide Award Winning Service and the best selection of mortgage products in the country, but we also offer our Free Financial Fitness Seminars and have added Personal Financial Coaching for those who truly desire a change but would like some assistance along the way. If you don’t change something then don’t expect different results.  As always you can call us anytime to discuss how we may be able to help you.

At Neighbourhood, & the home of the Brian Marling Mortgage Team, we are concerned for the total well-being of our clients. That’s why we are taking the years of experience from our award winning office and offering a series of FREE Seminars to our clients and their friends & families and to the public at large. The seminars, entitled ‘Financial Fitness’, will be offered free of charge and will cover all the secrets of successful personal financial freedom.  If interested please call our office at 905.372.7222 to reserve your spot as seating will be limited.

June 2011

This article is provided by Brian Marling, Accredited Mortgage Professional, of Neighbourhood DLC – Canada’s #1 Mortgage Team  905.372.7222

It never ceases to amaze me the amount of time we spend on some areas of our lives as opposed to the amount of time we do not spend on other areas of our lives. For example, all kinds of surveys tell us that the average person spends somewhere between 6 – 8 hours a day in front of the television, but probably less than half an hour a day on average in some form of physical exercise. Or what about the amount of time we spend on planning our vacations, organizing our homes, being on facebook, programming our iPod, etc etc versus the amount of time we spend on planning our finances and securing our financial futures. In my 15+ years in the financial services industry it has been my experience that most people spend very little time in planning and managing their personal finances. Why is that?? 

The typical answer usually has something to do with “leaving it to the professionals”, and yet never in history have we had more information available to us then we know what to do with. Yet, the area of money or financial management still seems to be a great mystery to most.  Add to that our Canadian reserve and many  don’t even like to talk about it. The problem when it comes to the financial arena is that what you don’t know is likely costing you thousands.

Every week I help my clients save thousands and thousands of dollars by educating them on the things they don’t know – and I love doing it! One of my favourite expressions is, “You don’t know what you don’t know.”.  So quit beating yourself up, get your head out of the sand and find out. The key here is to getting professional unbiased advice.  My business, of course, is in the mortgage arena, but our passion is in helping our clients to get out of debt as soon as possible and stay out of debt forever. Most people need help in this area for what I believe are obvious reasons.  Mainly due to the fact that we receive very little, if any, training or education in this area. Combine that with the fact that financial institutions really do not have a vested interest in your becoming debt free – think about it.

More than half of Canadians say they’re making good progress paying down their debt, still many fear it’s not enough, according to a new survey.  

Harris-Decima and CIBC polled more than 2,000 adults and found 72% are holding some form of debt. The good news is 61% say they’re making good progress repaying it with many recently making at least one lump sum payment on what they owe.  The bad news is 42% feel their debt burden is weighing on their financial goals.

The real problem in my opinion is not just the debt itself, but the feelings of helplessness when it comes to trying to figure out how we got in this mess and how to get out of it – easier to just watch TV. Some situations are more challenging than others for sure, but the key is to at least start the conversation.  It would be my pleasure to give you a free mortgage check-up and debt analysis to see whether or not there are thousands hidden and just waiting to be unleashed.  What you don’t know could be costing you thou$and$ – wouldn’t you prefer it in your pocket as opposed to your creditor’s??

These are the kinds of things we discuss on a daily basis with our clients – hopefully before mistakes are made. As Mortgage Professionals we care about your entire financial picture and offer expert advise designed to help you become debt-free as soon as possible and on your way to creating real wealth.

Because Neighbourhood DLC is Canada’s Largest Mortgage Team, we can offer you the absolute best products, service, advice & pricing. Call me today, Brian Marling 905-372-7222 for a Personal & Private consultation.

Here at Neighbourhood not only do we provide Award Winning Service and the best selection of mortgage products in the country, but we also offer our Free Financial Fitness Seminars and have added Personal Financial Coaching for those who truly desire a change but would like some assistance along the way. If you don’t change something, then don’t expect different results.  As always you can call us anytime to discuss how we may be able to help you.

At Neighbourhood, & the home of the Brian Marling Mortgage Team, we are concerned for the total well-being of our clients. That’s why we are taking the years of experience from our award winning office and offering a series of FREE Seminars to our clients and their friends & families and to the public at large. The seminars, entitled ‘Financial Fitness’, will be offered free of charge and will cover all the secrets of successful personal financial freedom.  If interested please call our office at 905.372.7222 to reserve your spot as seating will be limited.

SPECIAL NOTE:  We have recently bought our own building and would love for you to drop by and say hi.  Come see us at The Neighbourhood Professional Centre  #9 James Street East in Cobourg – right off of Division Street.

June 2011

This article is provided by Brian Marling, Accredited Mortgage Professional, of Neighbourhood DLC – Canada’s #1 Mortgage Team  905.372.7222

Ahh…it’s a favourite daydream of working Canadians: to go into business for yourself! For some Canadians who are self-employed, their situation is the consequence of corporate downsizing. For others, it is a carefully planned decision to leverage their knowledge and experience for themselves and improve their own bottom line.

Typically a very innovative and energetic bunch, the self-employed now comprise approximately 18% of Canada’s total workforce. We like to imagine that these are the lucky folks who are living their entrepreneurial dreams. But talk to self-employed Canadians about getting a mortgage and many will tell you that the dream can have downsides.

These individuals – who may actually be more financially successful than ever – often do not fit traditional bank lending criteria. It can make mortgage shopping a frustrating and, for some, a humiliating experience. Without an established stream of pay stubs from an employer, lenders have none of the traditional assurances that you can meet your mortgage obligations. You may be expected to undergo a long and complicated process to prove your ability to service your debt.

Lenders want to verify your employment and your income – not a simple task for someone who is self-employed. Lenders are also looking ahead; they will want some evidence that payments can be made for the life of the mortgage – not just over the next year. Most frustrating of all, small business owners are usually expected to provide detailed financial statements for their business for the past two years. And what picture do those statements paint for the lenders? An astute business owner with a good accountant will work hard to minimize taxable income for the business: a smart financial management strategy. But when lenders plug those figures into their lending formulas – they may conclude that you are a high-risk borrower.

The problem is not with the self-employed as a category; it is with lenders’ traditional criteria, and their inability to reflect the different income environment of a self-employed homebuyer. Thankfully, the lending landscape has adapted to this market need.  Certain lenders through the mortgage broker channels have designed mortgage products precisely for this very attractive market segment. Naturally, the lender will still need to assess risk, but the criteria are tailor made for the self-employed and essentially take a common sense approach to the definition of income.

You could qualify for your mortgage based solely on what you state your income to be, and after confirmation that your lending ratios, credit and tax liabilities are in good order it can be that quick, that easy! As more lenders enter this market niche, you’ll find that not all products are equal. As a group, the self employed often delegate to other professional service providers and this is a situation where you may want to seek advice from a professional mortgage consultant so you get the best mortgage for your needs. For the self-employed – who build their own success on understanding the needs of their customers – the new mortgages designed for them are good business. And they’re also welcome news to the growing number of Canadians who are building their own success in their own way. You don’t have to feel like a second class citizen any longer.

These are the kinds of things we discuss on a daily basis with our clients – hopefully before mistakes are made. As Mortgage Professionals we care about your entire financial picture and offer expert advise designed to help you become debt-free as soon as possible and on your way to creating real wealth.

Because Neighbourhood DLC is Canada’s Largest Mortgage Team, we can offer you the absolute best products, service, advice & pricing. Call me today, Brian Marling 905-372-7222 for a Personal & Private consultation.

Here at Neighbourhood not only do we provide Award Winning Service and the best selection of mortgage products in the country, but we also offer our Free Financial Fitness Seminars and have added Personal Financial Coaching for those who truly desire a change but would like some assistance along the way. If you don’t change something then don’t expect different results.  As always you can call us anytime to discuss how we may be able to help you.

At Neighbourhood, & the home of the Brian Marling Mortgage Team, we are concerned for the total well-being of our clients. That’s why we are taking the years of experience from our award winning office and offering a series of FREE Seminars to our clients and their friends & families and to the public at large. The seminars, entitled ‘Financial Fitness’, will be offered free of charge and will cover all the secrets of successful personal financial freedom.  If interested please call our office at 905.372.7222 to reserve your spot as seating will be limited.

SPECIAL NOTE:  We have recently bought our own building and would love for you to drop by and say hi.  Come see us at The Neighbourhood Professional Centre  #9 James Street East in Cobourg – right off of Division Street.

January 2011

This article is provided by Brian Marling of Neighbourhood DLC – Canada’s #1 Mortgage Team  905.372.7222

I would like to ask you a question… when it comes to all things financial, whether we are talking about Mortgages, Insurance or Investments, who really has your best interests at heart? For most people today life is extremely busy. Often in a household both spouses/partners are working, the kids are involved in numerous extra curricular activities and it seems like we are going 10 different directions at the same time! We can barely get our heads above water long enough to take a breath and a day off or a ‘down day’ is a foreign concept. It’s a real challenge to juggle schedules and maintain any kind of balance in our lives these days. 

On top of all of that we need to manage our financial lives, which has become a critical issue in these times of uncertain economic conditions. So, when it comes to making financial decisions regarding mortgages, insurance, investments, managing debts, etc most do not have the time or expertise to sift through the myriad of choices and options? Take mortgages for example. There are literally hundreds of different products with various options and possibilities. So, how do you decide what is best for you and your family?  Most people, unfortunately, simply settle for the path of least resistance which is probably dealing with whichever lender they are currently with. After all, who has the time and knowledge to visit 10 different lenders and be able to compare all the nuances of the different options and rates? So how do you really know if you are actually getting the best possible scenario for your family? The answer – you don’t!

That’s where an Independent Advisor comes in. Common sense alone will tell you that when you deal with an Independent Advisor, who is NOT an employee of any financial institution, you are going to get the best unbiased advice there is. And guess what – contrary to what some would have you believe, most Independent Advisors do NOT charge you a fee for their services.  Whether you are talking mortgages, insurance or  investments an Independent Advisor has access to many companies products and services and will place your business where it makes most financial sense for you, and not the institution.  This is because an Independent Advisor works for you and NOT for any financial company or institution.

When it comes to mortgages for example, any one lender can only offer you something from their own mix of products. If they do not offer what you need or you do not fit in their box then too bad. Worse yet, what if a better solution exists from a different lender but you simply aren’t aware that it is even available? I don’t think the bank on one corner is going to send you across the street, do you?

Whether you realise it or not,  financial institutions certainly have an agenda. The problem is that you & I are not very high on that list.  We all know lots of lovely people who work across the counter at these institutions, but they must operate under the umbrella of large corporations. And who are these corporations accountable to? You and I as their customers?  No – they answer primarily to their shareholders.  And shareholders are primarily interested in profits. Now I do not have a problem with any company making a profit – how else would they stay in business. The problem for you and I when dealing with only one alternative is in the not knowing whether or not we have actually received the very best solution. Maybe we have, but maybe we haven’t.

Also, have you considered that they really don’t have a vested interest in our becoming debt free. Their very existence is dependent on our remaining in debt. And for how long?  Answer – as long as possible. 

My intention here is not to bash any particular lender. In fact, as far as it goes with my clients, if your current lender is the best possible solution then that is where we will place your mortgage – no question. Interesting to note however is that very few actually end up staying at the same place, which only underscores the fact that there are way more options for you than you probably know.

When you deal with an Independent Advisor like The Brian Marling Mortgage Team we work for you and nobody else.  Also, as part of our mandate, we will work closely with any of our clients to help them become COMPLETELY DEBT FREE including their mortgage.  In most cases this can be accomplished in under 10 years. We actually demonstrate this on paper at our Financial Fitness Seminars, the most recent of which was held on January 12^th .

It’s a new year so why not give your finances a fresh start. If you would like an unbiased and independent assessment of your mortgage and debt situation then please give me a call.  And I promise you won’t be disappointed.

Here at Neighbourhood not only do we provide Award Winning Service and the best selection of mortgage products in the country, but we also offer our Free Financial Fitness Seminars and have added Personal Financial Coaching for those who truly desire a change but would like some assistance along the way. If you don’t change something then don’t expect different results.  As always you can call us anytime to discuss how we may be able to help you.

At Neighbourhood, & the home of the Brian Marling Mortgage Team, we are concerned for the total well-being of our clients. That’s why we are taking the years of experience from our award winning office and offering a series of FREE Seminars to our clients and their friends & families and to the public at large. The seminars, entitled ‘Financial Fitness’, will be offered free of charge and will cover all the secrets of successful personal financial freedom.  If interested please call our office at 905.372.7222 to reserve your spot as seating will be limited.