Think about renewing right now. Folks fixed mortgage rates are better than ever. Have you ever in your lifetime had a 5 year fixed rate of 3.39%? We know we haven’t. What an incredible rate. With once again increasing global financial turmoil, borrowing costs could spike up as governments introduce new austerity measures to grapple with spiraling deficits.

It’s an ideal time to batten down the hatches and put your financial footing in a ‘safety’ mode. Plan for the worst and hope for the best as the saying goes. If you have any consumer debt, get rid of it now. Plan for Xmas expenses (pay cash instead of charging), create a nest egg (for an unexpected rainy day event like job loss etc), and do whatever you have to do to weather the storm.

Let’s say your present mortgage is 4.75% and carries a balance of $200,000 with 25 years remaining. Your payment is $1,135 and balance after 5 years will be $176,312. Get 3.39% from us and your payment drops by $148 per month times 60 months equals a savings of $8,880.plus you’re your balance at maturity will be $172,211 putting an additional $4,101 in your pocket for a total of $12,981.

Borrow extra to pay off $7,500 on your credit cards at 19.9% with payments of $225/mth and convert to 3.39% ($37.01/mth), and an extra $25,000 for your new ‘no touch’em’ account (cost is $123.37/mth). Your new mortgage is $232,500 with a payment of $1,147 or only $12.00 a month more than you are paying now. You have gone to safety and you are now financially secure with the lowest interest rate ever for the next 5 years. You have no credit card debt AND you have $25,000 in the bank for an emergency.

Whatever you do, please do not allow yourself to be put into a Collateral Mortgage at a bank, and by all means do not simply sign back your renewal offer without speaking to us first. If you receive a renewal notice, call and tell us what you have been offered and see if we can beat it. Chances are we will and save you thousands of dollars. If your mortgage doesn’t mature soon, but will next year, be proactive and ask your (bank) lender what renewal rate they will give you now, if any. Then call us to compare.

Rate is always important, but what people rarely think to ask about is how any penalty is calculated if they need to break the mortgage. Did you know most Canadians move/sell every 3.5 years. If you have a bank mortgage, your penalty will be high because it is calculated using ‘Posted’ rate, not the discounted rate our lenders penalties are based on. Just last week, we saw a (bank) penalty of $30,000. Wow. If your bank says ‘Posted’ run for the hills. Remember we look out for your best interests, always.

With fixed mortgage rates having fallen to all time lows we thought we would write to those of you who are not too far from retirement.

We have big proponents of the variable but the time may well have arrived to have a serious look at ‘GOING SAFE’ for the next five years, and most importantly determine the smartest strategy to follow until retirement arrives.

Those getting the golden handshake soon should be getting the lowest rate mortgage possible with the longest amortization giving you the lowest payment for the longest period of time.   5 year fixed rate money is as low as 3.39% (30 day close), 7 year at 4.49% ,  and 10 year at 4.79% (up to 1 and half per cent below the bank’s posted rates). We have never seen rates this low in our entire career. The spread between variable and (our) fixed rates is so narrow, that now may be THE TIME to go to safety, long term.

Folks, we see too many people who plan too late or don’t plan at all.  During their working lives they sacrifice to pay off their mortgage but don’t make it. Life gets in the way. Having a small mortgage  is good but not at the expense of being cash poor. And so they struggle into retirement.  Once they retire they have fewer options available because their income has dropped. They become equity rich (you can’t eat equity) and house poor, continuing to struggle when they should have ample funds to live the ‘Golden Years’ the way they are supposed to. 

Call us today, to arrange a convenient time to come into our office to discuss you current and future needs and have us help you find the best financial strategy going forward in retirement.

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Rick was laid off from a large area manufacturing company and his wife Sue carried the family on her minimum wage job. The Elora couple kept themselves afloat by racking up their credit cards for over 6 months and then and maxed all their credit  out. When they couldn’t meet their monthly obligations they stopped paying their smaller cards.  Then went to their bank but the bank couldn’t help them because their credit score was now too low.

We established that Rick and Sue had good credit history over the long term and we could see that they were responsible people. They simply had a current problem that required a short term solution, which is what private mortgages are designed for.

We arranged for a $38,000 second mortgage at 12 per cent for one year. The new money paid off all their credit cards (at 18 -29%).  Our private lender met with them, saw the property and became comfortable with their ability to make the payments which are much less than their current credit card payments.  The 2^nd mortgage will give them time to re-establish good credit.   With one year left in their first mortgage, we will be able to get them a new low rate first mortgage at that time, and payout the private lender.

If you have a problem, and (most importantly) you have sufficient equity in your home, a private (short term) mortgage may be the answer. Think of it as a band aid to stop the bleeding, put out the fire, and give you the time your need to recover from your troubles.

Life’s unexpected circumstances happen all the time.  It is crucial that you find a reliable, reputable mortgage broker (we know one). It is always best to deal with someone locally who you know will act in your best interests.

As the government has tightened lending guidelines making it more difficult to access  home equity, the demand for private second mortgage money has increased.

Many of our private lenders have come to us (for a better return) because both interest rates on savings accounts and their stock (bank) investments provide negligible returns any more. Investing in second mortgages can be very lucrative yielding returns in excess of 12 per cent.

Of course private lending carries certain ‘risks’ with it, but as experienced professionals, we help our investors mitigate those risks as much as possible with proper deal structuring, property credit assessment and credit counselling to the borrower.

Private lending typically is a short term (1,2 or 3 year) solution. Private lending requires common sense and a good understanding of the borrower’s ability (and plan) to repay the debt. An ‘exit’ strategy  is an integral part of the transaction.

Loan default and loss is actually quite rare, and our private lenders risks are well diversified over numerous real estate properties at any  given point in time. The key is not to invest too much of your investment funds in one property but rather spread it out over multiple property loans and earn additional fees.

If you have investment funds, or want to consider using some of your equity to place in private mortgages, please give us a call today.

Jillian called us right after she had signed her mortgage renewal with a private mortgage at a 10% interest rate.  She told us she had put her house up for sale because  she couldn’t pay her income taxes and she was behind a year on her property taxes.  Although she was self-employed and receiving $2,500 in spousal support, a big $25K bill from Revenue Canada was impossible for her to pay.   She was paying $2,000 per month on a private mortgage and Jillian was feeling, “like the walls were caving in”.  We told her we could help.

We arranged a mortgage for $250,000 at 3.5 % five year fixed rate mortgage, with one of our prime lenders.  Her payments are reduced to $1,119  per month, a savings of $900 per month on the mortgage alone.  Since prime lenders will only lend to people who have income taxes and property taxes up to date, we also arranged a private mortgage for one month to clean up the unpaid taxes.  With taxes paid, the new mortgage we arranged for her can close.  The best part of the story is that Jillian who had her house up for sale, now doesn’t need to sell.  “I really didn’t want to move,” said Jillian.  And thanks to our solution, Jillian doesn’t  need to.

Needless to say, the banks couldn’t help her but we could and did. Folks, once again, we have so many more options and solutions having access to many institutional and private lenders. We always do our best for our clients, because we care.