A former client walked  into our ‘Don Cherry House’ the other day after seeing our advertised 2.99% .

5 year fixed rate and asked if it made sense to refinance again.

“But I ain’t paying any big penalty again, said Bill.  Bill had been with a major bank and had a mortgage and a line of credit product and paid $5,000 in penalties last time round. The problem with many of the big banks’ mortgages is the penalties for breaking it are not well disclosed and the Interest Rate Differential is often determined by using a posted bank rate rather than a discounted rate. Hopefully, that will change with new legislation requiring penalties on mortgages to be disclosed in plain language.  Last time it made sense for Bill to get rid of his consumer debt and get into an affordable payment and he exchanged a rate of 5.99%  for 4.29% and said good-bye to his bank and their big penalties.    Bill had a different mindset this time round.  With a few grey hairs sprouting from his temples, Bill said he made a conscious effort to stop spending on credit.  Four years later, he had paid $25,000 off his mortgage.   So back to Bill’s question did it make sense to do something now.   With a little over one year left in his mortgage, we looked at amalgamating a 7 k credit cardinto his mortgage.  We reduced his amortization to 15 years and suggested when he puts all his hours in during his seasonal work that he increase his payment by an extra 50 dollars per week effectively the same amount he was putting on his visa card and going nowhere.  The good news is that his penalty will only be $1,000 because our non bank lenders use a discounted rate when calculating penalties.  Bill  will now havefive years of security at the lowest rate in history  2.99%, he will pay $50,000 off his mortgage in the next five years without even making the extra payments.  Good news is his payment remains virtually the same, he is paying more principal than interest.  We told Bill he is one of our success stories.  And he smiled. 

“We are currently locked into a 10 year mortgage with 8 years left at 6.6% (We needed extra cash at the time). We have some credit card bills that we only seem to be able to pay the minimum balance so they don`t go down, ”Jim wrote last month in an email.

So we called Jim to find out what`s what.  With a value expected of 250 k and a mortgage of 202k it seemed there was little we could do. The government now only permits refinancing to 80% so on the surface it looked like this family could not be helped. But we dig  deep to see to find solutions for homeowners drowning under the weight of debt. After an appraisal, we were both surprised the value of their home was a bit higher at 260k.   So even with the penalty of $11,000 (which includes paying the cashback back) we were able to get a new 1st mortgage.  Payments will drop from $1200 per month to 895 per month.  Interest is going down from 6.6% to 2.89%.But we didn`t stop there.

Now through our company we offer 2nd mortgages up to 95% of value.  So we were able to get a 2nd mortgage for $45,000 to pay off all credit card debt with payment of $450 per month.  They were paying close to 1000 per month on their credit cards and the interest is much less.

Jim and his wife Lorraine were thrilled. With our coaching they will work to eliminate their debt under manageable payments. They can finally breathe again.  They got into the jam when Lorraine was off for a year on mat leave and could never catch up.  The bank who lent them the money could not help.  But we could.