With the price of oil affecting other items in the consumer price index, can we expect the overnight lending rate to rise on May 31? The overnight lending rate has an impact on the a bank's prime rate, directly effecting variable rate mortgages.
If you have a variable rate mortgage - don't panic! If the bank of Canada raises rates at the end of May, the benefit of locking into a fixed-rate mortgage may not be the best choice. Remember that the economic indicators that affect the prime rate, don't directly affect fixed-rate mortgages. Over the last week, we've actually seen a slight decrease in the bond market, which impacts fixed rate mortgages.
Stay-tuned to find out if you should fix your mortgage or keep it floating with the prime rate.
Tuesday, April 19, 2011
Thursday, April 14, 2011
65 and I still have a mortgage
If you own a home in Guelph, often a goal is to have your mortgage paid-off by the time they reach 60. What I'm noticing in my mortgage practice is more and more people over the age of 55 require the assistance of a mortgage agent because they haven't yet paid their mortgage off.
There are a few consistent reasons that have come up recently on why a mortgage balance still exists (even after the age of 60):
- overspending on grandchildren (not wanting to let their own children know that they are having problems making ends meet on a retirement income, so the overspending happens on credit cards to "treat" grandchildren)
- unexpected job loss (given we're still in a recession, many older employees have been "let go" close to retirement. The unexpected job loss and the reduced income means a change in lifestyle, which is often a difficult transition)
If you're in this situation and are wondering what your next course of action is...please don't hesitate to contact me directly. I'll also be writing a few articles on this topic over the next week.
There are a few consistent reasons that have come up recently on why a mortgage balance still exists (even after the age of 60):
- overspending on grandchildren (not wanting to let their own children know that they are having problems making ends meet on a retirement income, so the overspending happens on credit cards to "treat" grandchildren)
- unexpected job loss (given we're still in a recession, many older employees have been "let go" close to retirement. The unexpected job loss and the reduced income means a change in lifestyle, which is often a difficult transition)
If you're in this situation and are wondering what your next course of action is...please don't hesitate to contact me directly. I'll also be writing a few articles on this topic over the next week.
Thursday, April 7, 2011
Using your home’s equity to “get ahead”
If you’re in your 40’s or 50’s and have looked at your investments and thought, “How can I generate more revenue?” – this article is for you. Using the equity in your home for good investments can help you spring ahead financially.
This can be a smart financial move, but you need to work with individuals who are experts. Seek the advice of a professional who has first-hand experience on using home equity as a financial tool. I always recommend getting a referral from someone you know and trust.
There are specialized mortgages available that allow you to easily access the equity in your home for cash investments or real estate. They allow you to convert equity in your home into money and then use that money to invest.
What kind of investments?
Whenever you use your home’s equity to invest in non-RRSP investments or real estate, that portion of your mortgage becomes a tax deduction. Often called “leveraging”, you’re essentially using someone else’s money to make money for yourself. By having a plan of action and a goal in mind, leveraging can help you increase your net worth and help you become financially-free sooner.
I’ve had many clients come to me who had good net worth and ask, “How can I purchase an investment property when all my money is tied up in RRSP’s?”. Often the best place to look is your own home. If you’ve done a good job at paying down the mortgage on your principal residence there is equity that you can access. Financial institutions will allow you to easily access the equity in your home to 80% of the appraised value. This is normally done through a secured-line-of-credit (SLOC). However, not all secured-lines are the same.
What features should I be looking for?
There are certain nuances in the repayment terms and how the interest is charged that you can be a benefit or detriment. An example of a feature that benefits you financially on a SLOC would include having a bank account tied directly to the secured line. When using the SLOC for real estate investing, you can deposit your rent cheques directly into the account, thus making your payment on the SLOC.
Another important feature may be having third-party access to the SLOC. In this case if you’re using your money to buy dividend-paying investments, then the dividends can go directly into paying the interest on the SLOC.
There’s more to mortgages and SLOC’s that can help you become financially free sooner. Ask the advice of someone who has first -hand experience and that you know and trust.
This can be a smart financial move, but you need to work with individuals who are experts. Seek the advice of a professional who has first-hand experience on using home equity as a financial tool. I always recommend getting a referral from someone you know and trust.
There are specialized mortgages available that allow you to easily access the equity in your home for cash investments or real estate. They allow you to convert equity in your home into money and then use that money to invest.
What kind of investments?
Whenever you use your home’s equity to invest in non-RRSP investments or real estate, that portion of your mortgage becomes a tax deduction. Often called “leveraging”, you’re essentially using someone else’s money to make money for yourself. By having a plan of action and a goal in mind, leveraging can help you increase your net worth and help you become financially-free sooner.
I’ve had many clients come to me who had good net worth and ask, “How can I purchase an investment property when all my money is tied up in RRSP’s?”. Often the best place to look is your own home. If you’ve done a good job at paying down the mortgage on your principal residence there is equity that you can access. Financial institutions will allow you to easily access the equity in your home to 80% of the appraised value. This is normally done through a secured-line-of-credit (SLOC). However, not all secured-lines are the same.
What features should I be looking for?
There are certain nuances in the repayment terms and how the interest is charged that you can be a benefit or detriment. An example of a feature that benefits you financially on a SLOC would include having a bank account tied directly to the secured line. When using the SLOC for real estate investing, you can deposit your rent cheques directly into the account, thus making your payment on the SLOC.
Another important feature may be having third-party access to the SLOC. In this case if you’re using your money to buy dividend-paying investments, then the dividends can go directly into paying the interest on the SLOC.
There’s more to mortgages and SLOC’s that can help you become financially free sooner. Ask the advice of someone who has first -hand experience and that you know and trust.
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