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 1st 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.