Mortgages.ca

blog, Mortgage Education

How to Pay Down Debt & Increase Your Cash Flow

Owing money can quickly become a vicious cycle when most of your earnings go toward paying creditors instead of lining your own pockets.

Pay-Down-Debt-Increase-Cash-Flow

James Harrison, AMP
Mortgages.ca

 

Many Canadians have accumulated debt to finance major milestones or to pay for smaller day-to-day items. Though debt is quite common, you should keep a close eye on your loans and think about cutting down. According to the Bank of Canada, most Canadians now owe $1.70 for every dollar they earn. As interest rates climb, homeowners are focusing on paying off debt and saving money in 2019.  

The higher your debt load, the less cash flow you have. Before your bills become too much to handle, talk to a mortgage broker about debt consolidation options and your eligibility to refinance. Mortgage brokers have the knowledge and resources to advise you on the most effective ways to pay down debt and increase your cash flow.

 

Pay High-Interest Loans First

Loans like credit cards, lines of credit, high mortgage rate loans, and private company loans are harder to pay off because a bigger portion of your payment goes toward interest. You can save money by paying off these bills first. For larger amounts that take longer to pay, consolidating debts into a lower interest secure line of credit or mortgage line of credit will help you save money so that you can repay the debt quickly.

 

Refinance Your Mortgage

You can lower your monthly mortgage payment and increase your cash flow when you refinance your home loan. Rather than continue to pay unrealistically high interest rates, you can consult a mortgage broker to find a lender that offers lower rates so that you can put more money toward the actual loan. A broker can also advise you on the best options to reduce your monthly mortgage payment so you can save more money for other things, like childcare.  

 

Consolidate Your Loans

If you have too much credit card debt or high-interest debt, consolidating them into one low-interest loan will reduce your monthly expenses to one manageable bill.

 

Save for an Emergency Fund

Saving money can be challenging when you owe creditors, but having money for unexpected emergencies will reduce your risk of going further in debt. Increase your cash flow by putting part of your earnings away each month so that you’re better prepared in an emergency.

In today’s borrowing culture, Canadian homeowners have high debt. Multiple loans and high interest rates can negatively impact your credit rating if you cannot pay your bills. Before your debt load becomes overwhelming, talk to a mortgage broker. A broker can help you find effective ways to save money by refinancing your mortgage or consolidating debt to a lower interest rate line of credit, and you can avoid lowering your credit score.

 

For more information on how a mortgage broker can help you reduce your debt, click Apply Now, email us at info@mortgages.ca, or call 647-795-8700 x 0 today for your free, no-obligation consultation.

With the help of a Mortgages.ca broker, you have nothing to lose and only great INSIGHTS to gain.

blog, Mortgage Education

Buying a Second Home? It’s Simpler Than You Think!

Expanding your lifestyle to include a recreational property like a cottage, chalet or cabin is a simple process

 

By Steve Harrison
Mortgages.ca

 

Buying a Second Home

People tend to think securing financing for a second property will be an overwhelming and complicated process. But if you’ve already purchased a property (which, of course you have, this is your second property), you’re already very familiar with the process.

 

Process and rates are the same

For one, the approval process for buying a second property is similar to that of buying a primary residence, and the minimum downpayment is the same — which can be as little as five per cent of the total purchase.

Sometimes people are concerned they won’t be eligible for the same rates on a mortgage for a cottage, but a mortgage for your cottage is just like a mortgage for your primary home. Although purchasing any home with less than 20% down would have a mortgage insurance premium, there would not be a rate premium just because you’re buying a second home/cottage.

For some of our younger clients, the idea of buying a cottage is increasingly becoming more attractive. They choose to live in a smaller condo during the week, then spend weekends and holidays in a recreational home outside of the city. It’s a lifestyle choice that’s especially appealing for people who have the option to work remotely.

 

Refinancing to increase wealth

One great method to help with the down payment of your second home is to refinance the mortgage on your first property. Some clients don’t realize this is a viable option, but it’s a great way to use some of the capital in your current home to help land your dream vacation home.

Example:

Let’s say you’ve bought a home for $700,000 and you had a mortgage of $560,000. And now that home has increased in value since you bought it and is now worth $1 million, meanwhile you’ve got $500,000 left outstanding on your current mortgage.

That means you’ve got $500,000 of equity in your home. Assuming the person qualifies, they could refinance their current property to 80% (800k), which would give them 300k in cash to use towards a vacation home.  With the current refinancing rules, you’ll always have to leave 20% equity in your home.

 

Using a home equity line of credit

Alternatively, you can consider using a home equity line of credit to help finance the purchase of your second home.  For example, one of our clients recently used a home equity line of credit to buy a cabin. They had already refinanced their home to have the line of credit available, and when they found a great deal on a cabin up north, they were able to jump on it right away.

They paid cash for the cabin using the line of credit, which is a slightly higher rate than a mortgage on the cabin, but it worked for them and depending on your situation we can help you figure out what would work for you. Which leads me to my last point:

 

Make Sure to work with a licensed broker

As licensed mortgage brokers, we help our clients get the mortgage that’s right for them by negotiating on their behalf with banks, credit unions, and other mortgage providers for the best rates and products. Our services are free to home buyers, and our fees are paid by lenders. You have nothing to lose and great insights to gain!

Are you considering buying a second home? Apply Now or Contact Us via phone (647-795-8700) or email (info@mortgages.ca)

 

blog, Mortgage Education

Making the Most of Your Mortgage Broker

Source: Which Mortgage

The process of becoming a homeowner can be long and arduous, and your mortgage broker is one of your key allies in getting a mortgage in order to buy a home. But if done right, the relationship between you and your broker doesn’t stop once you have the keys.

 

mortgage-broker-meeting

 

Depending on how your individual mortgage is structured, you’re going to be up for a renewal at least twice over the life of your mortgage – and, for many people five or more times. That means many opportunities to reconnect with your mortgage broker, not only to get you the best interest rates available at the time, but to evaluate where your mortgage falls in your overall financial picture.

A good mortgage broker will definitely want to keep you as a client over the lifetime of your mortgage, so your broker will probably already have their own efforts in place to reach out to you every so often and checking in on how your mortgage payments are coming along. They might even have a newsletter of some kind, with helpful tips for homeowners. Either way, it’s only to your benefit to have a good relationship with your broker; here are some ways that you can make the most out of that relationship over a long period of time.

Be honest

When getting your mortgage, there’s no point in lying about your occupation, your income, or your debt. It’s all going to come out in the wash anyway, and your broker can’t place your mortgage application with the best lender for you if they don’t have all of the facts. Not to mention that you’re going to have to come clean eventually when the lender does their due diligence on you. If you don’t tell the truth and lie about details on your mortgage application, then you’re committing mortgage fraud, which is something that you want to avoid at all costs. This holds true after you’ve gotten your mortgage as well – be honest when it comes to what you want and don’t want for your next mortgage term. Remember that your broker works for you and is paid (by lenders) to deal with the situation that you present to them, not the situation that works best for them and/or is easiest to place.

Keep in touch

Months, even years, may go by, but don’t let your mortgage broker become a stranger. As mentioned, your broker may – and should – reach out to you every so often, but if they don’t, don’t be afraid to initiate contact with them, even if it’s just dropping a quick email to say hello or asking a simple question. This way, when you actually need something or it’s time to discuss renewal, your mortgage broker won’t have to think, “Who is this person?”

Don’t be shy

Things change. Your broker doesn’t expect your financial realities to be the same 10 years down the road as they were when you got your mortgage. If you’ve changed your plans and now want to own a farm or move out of province or even start thinking about investment properties, don’t hesitate to let your broker know. They can only help you develop a mortgage plan if they know what your plans are; otherwise, the options that they suggest for you might not work for your short-term and/or long-term goals.

Refer

If you’re happy with your mortgage broker, don’t keep them to yourself! A large part of a broker’s business is referrals, and often those referrals come from clients who they’ve previously worked with to get mortgages. If you know someone who is looking for a mortgage, maybe even someone who is unfamiliar with the role of a mortgage broker, offer to put them in touch with yours. It’s really a win-win-win situation: good for your friend who needs a mortgage, good for your broker who needs the business, and good for you, who just bought some goodwill from both parties.

Educate yourself

Part of the reason it’s beneficial to speak with a mortgage broker is so that you can learn about the wide range of products and services in the market that they can get for you. But if you do your own research into a mortgage product or subject before speaking with them about it, then you can have a much more productive conversation about the products and see how they apply to your situation. You’ll be able to ask more detailed questions, and will probably understand your broker’s responses a bit bitter. It never hurts to do some preliminary homework.

Just like your relationship with your realtor, the relationship with your mortgage broker is a long-term one. Knowing how to make the most out of that relationship over the life of your mortgage can really work out in your favour.