Total Confusion.  That’s the way Jules, a single mom from Fergus described her financial life.  She has a good job with the government making 60 k a year.   Three years ago,  Jules took out a tiny mortgage of 100 k with one of the major banks when her marriage broke down.  Later,  the bank rolled out a big line of credit for 30k and a visa for another 20k.  When she maxed out both, the bank gave her another line of credit for another 20k at a higher interest rate.   With a property worth $400,000 the bank was perfectly safe equity wise,  in advancing various credit.  But all the obligations, with different payment dateS and various  interest rates,put Jules into a state of confusion.  She maxed her credit out within three years putting kids thru university and her credit suffered.  When we arranged one mortgage with one payment, Jules was elated.   “ I didn’t know whether I  was coming or going. Sometimes I would pay the one line of credit twice by mistake.  It was a nightmare,”  she said. 

We have seen it so many times.  Homeowners are filled with pride when the bank sets up a big lines for them.  They think, wow I am a triple ‘A’ client.  But what they don’t realize is these lines of credit come at a high price in terms of interest.  And quite frankly it’s rare for us to see a homeowner who hasn’t maxed them out.    ‘ Just throw it on the line of credit’,  homeowners say.  Without huge disclipline, homeowners invariably get themselves in trouble. 

So for Jules, when we presented one mortgage, one payment at an interest rate of 2.6% she was extremely relieved.  “Thank goodness I have just one mortgage now and I am going to work toward paying it down as fast as I can.”  We have total confidence she will.