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Pre-Qualification vs Pre-Approval

With the spring real estate market underway you hear a lot about how simple getting a pre-qualification or a pre-approval can be. You’ll be told you can go online, fill in a few fields and are given a magic number. While getting a pre-qualification is a quick and simple process, it won’t leave you feeling as confident as a pre-approval with a licenced professional would.

Clients are often confused about the difference between a pre-qualification and a pre-approval so let’s talk about the differences and why getting a pre-approval is more worth your while.

During a regular pre-qualification a representative will ask you for details about your income, debts and give you a general idea of how much you could afford. It is a very basic analysis and it does not take into account your credit report which plays a large factor in whether you are approved or not later down the road when you find a property you want to put an offer on.

Getting a pre-approval done with a licenced mortgage agent involves a few more factors, however provides you the best results and allows you to go into a bid for a property with confidence. Your licenced mortgage agent will require your recent paystubs, a current employment letter and will pull your credit report to evaluate your credit history and beacon score. You’ll remember from a previous article 680 and above is where you would like to be. Other important factors such as property tax estimates and the cost of heating will also be taken into account. After looking at all this information they can give you a pre-approved amount and also provide you a letter if you wish. Often time Real Estate Buyer Agents will not work with you unless you can confirm you have been pre-approved for a mortgage. By knowing your pre-approved amount you won’t waste time looking at properties you can’t afford and can focus on finding your ideal home within budget.

If you have any questions about the pre-approval process or would like to get started on yours please reach out anytime.

Ericka Kodituwakku is your trusted Mortgage Agent in Ottawa specializing in first time home buyers. Contact her today for a FREE Homebuyers Guide and with any questions on the mortgage process.

Ericka Kodituwakku, Mortgage Agent
Mortgage Alliance Licence # 10530

(613) 413-2781
www.mortgagealliance.com/ErickaKodituwakku
ekodituwakku@mortgagealliance.com
https://www.facebook.com/KodiMortgage/

Preparing for homeownership in 4 steps

It’s the end of the month and your rent has gone through like it has for many years. You’ve never had an issue paying your rent on time and perhaps you’ve thought about owning a home, but don’t know if you could afford it or don’t know where to start. Purchasing real estate can be a great long term investment putting you on a path to financial success and is attainable if the right steps are put in place.

When considering becoming a homeowner preparation is key and more so when it comes to getting approved for a mortgage. It is a process with several key factors to consider.

 

Here are 4 things you should be doing:

  • First, monitor your credit score. Banks and lenders use your credit score to determine the level of risk lending money to you will be. Having a higher credit score and clean credit history, ideally above 680, demonstrates you to be a good candidate.
  • Second, evaluate your income and employment situation. Your income level and debts will determine how much will be approved for. You also want to consider affordability. After paying your mortgage, monthly bills and other necessities is there any savings?
  • Third, saving a downpayment. At minimum you will need 5% of your purchase price to use as a down payment on an owner occupied property. Steadily saving for this in your bank account and having it ready a few months before making an offer will put you in a good position.
  • Fourth, seek expert advice. Speaking to a mortgage professional will put you on the right path to getting approved the first time. They will evaluate your individual situation and develop a plan with you towards becoming a home owner. Brokers work with several lenders including banks, credit unions, monoline and private lenders to make sure you are getting a good mortgage product at the best available rate.

The process does not need to be overwhelming and will be stress free if you work with a professional in the field who can answer all your questions and provide you with the information you need to make smart financial decisions.

 

Ericka Kodituwakku is a mortgage agent in Ottawa specializing in first time home buyers. Contact her today for a FREE Homebuyers Guide and with any questions on the mortgage process.

Ericka Kodituwakku, Mortgage Agent
Mortgage Alliance Licence # 10530

(613) 413-2781
www.mortgagealliance.com/ErickaKodituwakku
ekodituwakku@mortgagealliance.com
https://www.facebook.com/KodiMortgage/

Building My Retirement with Real Estate

Amina

Depending on whom you speak with there are many ideas of how to build a retirement nest egg. I have a specific plan for retirement that includes real estate. While many people still believe the stock market is the safer way to go, I decided long ago it was not for me.

For one, I did not want to invest and pay fees and for two I did not want to invest in the stock market, where I had relatively no control.

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It is no surprise that investing in real estate, is the safest (in most cases) investment there is and couple this with opportunities that abound in Canada, you have a recipe for success.

Long ago, before real estate and being a mortgage agent was a reality, I like everyone else invested in mutual funds, bonds and stocks. Unfortunately like so many other people, that all changed after the crash when almost my whole portfolio was decimated.

Thankfully I was youngish, and was able to start again. I took the reins and responsibility for my own retirement and investing goals and started to research everything that was available. At the time I was still working in film and television but slowly transitioning out to a new career in home staging. It was through home staging for real estate investors, that I was introduced to the wonderful world of real estate investing.

I researched everything from buy & hold, flipping and rent to own and in the end settled on rent to own, simply because I liked the idea of being able to help somebody become a homeowner and second I liked that the tenant was mostly responsible for the maintenance of the property – I was not interested in being a full-time landlord.

From rent to own I have moved again to a buy & hold four-plex with a JV partner and recently to lending my money. In addition, I have invested my RRSP’s into a syndicate product that will accrue for 5 years and pay annually 11% per year.

I must say that my favourite strategy by far is lending my money as it is bringing me similar or greater returns, however the risk is a bit higher. If you want the greater returns you need to be able to accept a modicum of risk…being a mortgage agent I know a good borrower when I see one – but even then things can go sideways in a minute, even with good planning!

I am in my upper 40’s and the crunch is on to make sure I have my retirement goals in check. My end goal is to purchase properties abroad that will provide me with cash flow and appreciation and one day a property when I am ready to retire, that I can move to.

Do you have a retirement plan? Is real estate a part of that plan? If not, are you perhaps interested in purchasing a rental property, lending your money or even investing in syndicate mortgages? If so, please reach out and have a discussion with me. There are many ways to invest in real estate that will provide you greater returns than what you will get through the stock market.

I can be reached at amina@aminas-ms.ca or 416 697-5443.
To Your Wealth! Amina

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HOW TO GIVE THE MOST MEMORABLE GIFT EVER!

Amina

Each year as the Christmas season nears, the advertisements’ get hot and heavy for anything and everything that a person can shop and purchase as a gift for Christmas. Turn on the TV and you see ads that basically say you don’t love your girl if you don’t buy her diamonds. Flip through a magazine and it’s loaded with more advertisements than content. Sign online and no doubt you will find tons of ads that scream BUY, BUY, BUY!

We all like to get gifts, that’s a given. But have we become so material oriented that we’ve forgotten about the greatest gift of all? The gift of love, of giving of oneself, far outweighs any amount of money that could be spent and any material things money could buy. The old saying that money can’t buy love hasn’t changed.

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Many folks in today’s world are in such a hurry. We have instant oatmeal, instant coffee, instant messaging, microwave dinners, etc. We are in such a hurry to get somewhere that we fail to stop and see the beauty of where we are right now. It’s go, go, go, and don’t slow down for anything. While we are in such a hurry, we forget to take time and enjoy life. We often spend outrageous sums of money buying things for the people we love, yet deny them the greatest gift of all… ourselves. Come January we find ourselves in a perpetual state of debt again!

There is one perfect holiday gift. It’s a gift that can be shared and used throughout the entire year. It never gets overused. It never runs out of battery power. It never needs to get replaced. It’s the one thing you can never have too much of. That perfect gift is YOU!

Instead of spending a load of money for Christmas and going deeper into debt, wrap up something new and different this year. Wrap up a nice note that gives the gift of your time to those you love and that love you. Rather than trying to buy loads of stuff for your friends, kids, spouse, and loved ones, give the best gift there is, the gift of your time.

For instance this year, my family and I (6 of us including my husband, child, parents, father-in-law, sister and I) are each contributing $50 and buying a Christmas for a less fortunate family, including Turkey and all the trimmings and a gift for each child.

The most memorable Christmas gifts won’t be the ones that you spent hundreds of dollars on. It’ll be the gift where you gave yourself, when you spent time with the people that love you and that you love.

With this message in mind, I hope you give the most memorable gift to those you love and also receive the same from those that love you.

Merry Christmas and Happy New Year!

To your Wealth!

Amina

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Investing In Syndicated Mortgages Vs. Rental Properties

Amina

Over the past few months I’ve penned a number of articles on this blog looking at the benefits of non-traditional ways to invest equity, namely syndicate mortgages. However, how do you really know when you should be investing equity in syndicate mortgage options, and when it might be best to invest in a more traditional buy and hold property?

Firstly then, any kind of investment needs to be accompanied by solid research. Syndicate mortgages for example, are shied away from sometimes due to perceptions of high risk and insecurity. However, in reality, 90% of people who invest in syndicate mortgages make stable 8-10% returns per annum. Often as well, they profit from 2-4% annual bonuses and 90% of syndicate mortgage investors actually decide to re-invest in syndicate mortgages in the future. The key quite simply, is to do your own research and make sure to have as knowledgeable as possible a mortgage agent on your side. Moreover, this is even more important for people who choose to invest in buy and hold property.

With buy and hold properties for example, risks initially brought to mind when thinking about investing, are associated primarily with property values being at the mercy of volatile financial markets. The ultimate nightmare scenario if you like, is that investment properties might depreciate in value. However, what investors often overlook is the fact that investment properties overall have an average annual vacancy rate of 5%. Likewise, regardless of whether an investment property is tenanted or not, investors are still looking at 8% annual property management and 8% additional maintenance costs.

The key of course is to secure investment properties in slightly under market areas, with low vacancy. Likewise, if you have a significant amount of equity available, why not diversify?

With minimum down payments on investment properties standing at just 20%, anyone with equity in their properties can potentially benefit from investing in a number of properties all at once, but also with the right deal, still being able to invest in various syndicate mortgage options.

In fact, what it comes down to in many cases when choosing between syndicate mortgages and investment properties, is how passive a return people are looking for on their respective investments. Where syndicate mortgages guarantee 8% annual returns for no actual labour, investment properties run 8% management costs which many people choose to offset by managing projects themselves.

As a professional mortgage agent, I don’t try to sell people financial products that are in my interest. I build my reputation on getting my clients the best possible deals suited to every one of them individually. If therefore, you presently have equity to invest, but aren’t sure of what might be best for your specific situation, give me a call today or contact me directly by clicking here and let’s start talking about what the best investment strategy for you might be.

To your Wealth!

Amina

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Fixed Or Variable: Which Rate Is Best For You?

 

Amina

At present thousands of homeowners across Canada are eyeing their options with more than a little trepidation. The majority of Canadians after all, are risk averse and when it comes to our mortgage options many of us have traditionally chosen fixed rather than variable interest rates, in order to allow us to avoid sudden hikes in the Canadian Prime. In fact, even just the idea of being stuck on a variable rate after a hike in the prime leaves many of us on edge. Yes, we can lock the rate in if we think the prime is getting too high, but who is to say we’ll manage to do that right at the right moment? Rate hikes after all, can leave homeowners not just paying less off their principle, but them facing paying more interest over the long run.

All that said, recent studies have demonstrated that historically at least, homeowners on variable rates have actually saved more in the long term when compared to more risk averse homeowners opting for locked in rates. This being the case, between 2008 and the present, variable rate mortgage options have experienced something of a resurgence in popularity. Moreover, those who have been part of this resurgence have made significant savings. The Canadian prime has consistently fallen since 2008 in tandem with Central Bank instigated economic recovery measures. This being the case, those who elected for fixed rate mortgages back in the 2000-2008 (supposed) boom years, have been left feeling a little cheated to say the least.

The only question is: How low is too low? You see, a significant number of Canadians haven’t just opted for more variable rate mortgage options over the past decade. Rather, many Canadians have also risked incurring penalties in order to switch back on to variable rates in light of seemingly fantastic overall saving benefits. However, the variable rate party can’t last forever and the sense of this seems to get more tangible by the day.

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As of Sunday 11th of October 2015, the Canadian prime was standing at just 0.75%, that’s the lowest it’s been in over thirty years. Simple logic dictates then, that the rate can’t go much lower before being forced to rebound. Is this therefore the time to re-lock in variable rates? Expert economists who have been touting the virtues of variable rates have only been doing so after all, in light of a steadily declining prime rate going all the way back to 1979, and the reality is that the prime simply can’t get much lower. Or can it?

Whatever side of the fence you are on, you have to agree these are interesting times to say the least. One thing is for certain though, and that’s that now more than ever people need practical up to date mortgage advice, which they can trust over and above the usual sales pitches from all the big lenders. Being a completely independent mortgage agent, I can offer that advice. I make my business by building my reputation through my clients and if you need mortgage advice regarding the present rate fall and what it might mean for your future, I’d love to be able to help you in this regard.

 

To your Wealth!

Amina

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Okay – What's Really The Best Way To Build Equity?

Amina

As a professional mortgage agent serving the Greater Toronto Area, it’s a question I get asked all the time, what is the best way to build equity?

Most of us already know that our home’s equity is the amount of our home which we own minus the outstanding balance and interest on our mortgages. However, traditionally people often appreciate there as being only three ways to actually build equity. First off, we pay our mortgage each month. With every mortgage payment we then own a little more of our home and add a little more to our home’s equity. Alternatively, we attempt to add equity to our home by increasing our home’s market value through physical alterations and renovations. This and by hoping that our home will appreciate in value as consequence of favorable market conditions.

However, as well as physical alterations and paying off as much of our mortgages as quickly as possible, there is fourth way to build equity. In fact, if you’re serious about building equity, you perhaps shouldn’t be thinking about taking out a mortgage on a property at all. Instead, you should perhaps be thinking about taking out a Home Equity Line of Credit, or as it is popularly abbreviated, a HELOC. 

What? What’s a HELOC?

Okay, it sounds new, a little bit intimidating and if there really was a viable way to build equity quicker than by attacking your mortgage with everything you’ve got, surely somebody would have told you about it by now? Wouldn’t they?

Well, actually no. You see, HELOCs have actually been around a long time. One of the key differences between a HELOC and a traditional mortgage, however, is that mortgage brokers get paid a lot more money to sell mortgages than they do HELOCs. In fact, many banks don’t actually provide any incentives at all for brokers to sell HELOCs.

Why? Three words: No Compound Interest. With a Home Equity Line of Credit, you only pay interest on the remaining balance of your mortgage. This alone can save people thousands, if not tens of thousands in interest and significantly shorten the length of people’s overall borrowing terms.

Sound to good to be true? It gets better. With a HELOC there are no early repayment penalties and you can pay as much or as little as you want each month. In fact, with a Home Equity Line of Credit, you even have the option to just pay the minimum outstanding interest on your balance each month. Compare that alongside a traditional mortgage with compound interest, early payment penalties and penalties on even so much as paying too much of your mortgage off per annum, and the HELOC is a hands down winner when it comes to people really looking to build equity.

Okay, so what’s the catch? Well, there is one, but not really. Qualifying for a Home Equity Line of Credit is essentially just the same as qualifying for a traditional mortgage. However, with a HELOC people aren’t able to borrow more than 80% of their home’s appraised value. Likewise, HELOC interest rates are open and fluctuate with the prime, often making them a little higher than traditional mortgage interest rates. However, for people who feel like they want to run for cover at just the mention of variable interest rates, the HELOC has another bonus. – If you ever feel that the prime rate is going too high, you can lock in the rate and turn a HELOC into a traditional mortgage. And let’s just remember, if times ever look like they are not going in your financial favor, a traditional mortgage doesn’t let you decide how much or how little you can afford to pay each month now does it?

To HELOC or not to HELOC?

If you’re serious about building equity, a HELOC is definitely something which you should therefore be thinking about. Remember though, if you do decide that a HELOC might be in your best interests, your bank is likely the last place where you should head for impartial advice on actually getting one.

To your Wealth!

Amina

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MY CLIENTS NEEDS MUST COME BEFORE MY OWN

Amina

Yesterday I was contacted by an investor, who found me on Linkedin and had been reading some of my blog posts. He and his brother were investing in a smaller market about two hours east of Toronto.  This would be their first purchase in this area and it was a multiple bidding situation.

As first time investors they made some errors, which are common, such as putting in the offer before being pre-approved for financing.  Especially in a multiple offer situation you want to make sure that your bid for the property has no conditions of financing.  The only condition you want is the inspection.   This way if the seller is presented with all of the offers, they will most likely accept the one with no condition of financing as that is a sure thing vs. somebody who still needs to be assessed for financing and does not really know whether they can afford the property.

This investor had put in the offer, ordered the inspection and was now contacting me for financing – however the clock was ticking.  I  immediately asked for an extenstion as I was not certain that I could fulfill financing in such a short time (3 days left).

He went back to the realtor and asked for the extension but it was denied simply because it was a multiple offer situation. The realtor suggested her broker, who lived and worked in that market and could get the appraisal the next day – which would ultimately save the client time and possibly losing the deal.

It was great that they were both organized and could get me the paperwork but I still had to find the lender, who would do the deal.  To further complicate things, the investors were incorporated, which would mean further validation of income.

He kindly called me and said he would stick with me if I could do the deal.  Now, if I was looking out for my own interests, I would have said,  “Yes of course I can do the deal”.  Instead, I was looking out for what is best for my client and suggested he use the other broker with the connections in the marketplace.  If I could not get the deal done, I would not only lose the trust of this client but more importantly I would not be putting my clients needs before my own!

It is hard to give away business but I believe strongly in Karma – what goes around comes around.  The client thanked me for looking out for his interests and said that he would be using me for the next deal.

I believe that if we all focus on putting our clients needs before our own in every situation, it will come to serve us all well.

To your Wealth!

Amina

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Do you Qualify for a Fixed or Variable Rate Mortgage?

 

 Amina

Last week I was at the #CAAMP (Canadian Association of Accredited Mortgage Professionals) #Mortgage Symposium. The event happens once a year and highlights what happened in the #mortgage industry in the previous year and talks about the upcoming year and what we should expect.

It became very interesting when the #economist #Ted Tsiakopolous from #CMHC got up to speak. He spoke about the #Canadian #real estate landscape and provided #statistics. One statistic that was very surprising was the fact that only 30% of mortgages in Canada are #variable rate mortgages. So I thought this would make an interesting post.

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The first thing to note is the differences between fixed and variable mortgages. #Fixed rate mortgage – A #fixed rate mortgage is a mortgage where the #rate of interest and payment are fixed for a specific period of time. Generally known as the #mortgage term, it usually ranges from between 6 months and 10 years. As time goes on, more of the mortgage payment goes towards the #principal and less of the payment goes to the #interest. Furthermore, the #fixed rate mortgage is based on the #bond yield so as it rises, so do the fixed rates. #Variable rate mortgage – A #variable rate mortgage is a mortgage where the interest rate fluctuates with any changes in the lenders #prime rate. If interest rates go down, your mortgage payment will go down, but if rates go up, your payment goes up.  With some variable rate mortgages you can fix the payment and as long as rates stay below that required payment it will not change.  If rates rise high enough that you are not covering the necessary payment, your payment will be increased.

The important thing to note is that #qualification differs between fixed and variable and thus this is why it is only at 30% variable mortgages vs. fixed mortgages in Canada.

In a fixed mortgage, you will qualify at the #5 year fixed rate, which today is 2.73% and a 25, 30 or 35 year #amortization. The important thing to keep in mind is that with less than 20% down, you cannot qualify for an amortization greater than 25 years. The benefit of course with a #lower amortization is that you incur l#ess interest over the life of the mortgage.

Conversely in a variable mortgage, you must qualify at the #benchmark rate otherwise known as the #Bank of Canada #qualifying rate, which is currently 4.74%. if you remember only a few short weeks ago, the #BOC rate fell 5 #basis points after# oil prices also tumbled.

So which should you choose? Unfortunately it might not be up to you if your #GDS (#Gross Debt Service Ratio) and #TDS (#Total Debt Service Ratios) are not in line for qualifying for the Variable rate. Most “A” lenders look for a ratio of GDS – 32% & TDS-40%. “B” Lenders are more flexible but you will incur higher rates.

When I do a purchase analysis for my clients, I look at both options and present the pros and cons of both fixed and variable. I take into account my clients current monthly obligations, their current lifestyle and what they can afford.  Fixed or variable, it comes down to affordability and qualifiying. Don’t forget if you, a friend or family member have any questions about mortgage financing I’m here to answer those questions and to work with you to arrange the best product to fit your specific needs and comfort levels.

To your Wealth!

Amina

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TIPS TO PAYING OFF YOUR MORTAGE FASTER!

Amina

 

I had a great meeting last week with a prospective client.  They wanted to know how to pay off their 25 year mortgage in 10 years.  It was a huge focus for them, as they wanted to take the money left over after paying off their mortgage and put it towards their retirement savings.  They are both in their 40’s and want to be debt free by their early 50’s.

hour glassThey, like many people did not take savings seriously and so now in their 40’s find themselves with a hefty mortgage and not much in the way of savings.  I assured them that to do so would mean making sacrifices, such as less traveling, which they both love to do and eating at home instead of eating out, which they also love doing.  They assured me they were committed.  Of course there were many more sacrifices they would have to make but these were two of the biggest in their particular scenario.

Paying off your mortgage is the single most important step towards financial independence and a healthy retirement. Owning a principal residence outright gives you the financial freedom to channel money that formerly went to your mortgage into your savings or to pursue lifelong dreams or to invest in real estate, which in my opinion is the thing to do as it provides one with extra cash flow, which is another form of retirement savings.

If paying off your mortgage as quickly as possible is your goal you want to make sure you pay attention to the following tips.

Tip #1. First you want to make sure you have a good credit rating.  You can pull your credit report from Equifax here: (http://www.equifax.com/equifax-credit-score/)

By pulling your own credit bureau, you will be sure that when you speak to your mortgage agent or broker, there won’t be any surprises and if there are, you have already taken care of them.  You want to make sure that there are no “monsters in the closet” and that you are aware of your past credit problems, so that you can be prepared to discuss them with your mortage broker.

A good mortgage broker, will make sure that they explain your past indiscretions to the lender and that it does not impact your ability to qualify. You also want to make sure that you are not behind on payments as these can impact your score. It can make the difference between getting a great interest rate and one that is not that great. This can also impact the amount of interest you are paying on your mortgage.

Tip #2. You should be pulling your credit bureau every six to twelve months before shopping for a mortgage, just to make sure everything is on the up and up and that you are not faced with disappointment when it comes time to shop for that mortgage.

Tip #3. Don’t quit or change jobs just before applying for a mortgage, as that can drastically affect your ability to qualify.  Lenders want to see at least 6 months on the job.

Tip #4. The next step is maximizing your down payment.  The minimum required for most mortgages in Canada is 5% (depending on your credit rating) but by paying at least 20% down upfront, you cut down on your principal and interest payments and also avoid having to pay CMHC fees. Remember CMHC insurance protects your lender and not you in case of default so why incur that extra cost?  Of course it’s not always easy to pay 20% down so what else can you do?

Tip #5. You can be mindful of the amortization period.  Many people confuse amortization with term.  Amortization is the life of your mortgage, while the tem can run from 1-10 years with a fixed-rate or variable-rate interest mortgage.  After each term expires, you renew for another term.  Amortization on the other hand, defines how much interest you will pay over the life of the loan.  For example, you might pay less monthly (Principal + Interest combined) with a longer amortization, but the interest portion will be higher. Amortization can run anywhere from 15 years to 35 years (with at least a 20% downpayment). Interest can be the killer.  It can amount to thousands of dollars over the life of your mortgage.  Imagine what you can do with that extra money?

Tip #6. When it comes time to get that mortgage, don’t just go to your bank.  It is understandable that people want to stay with the same institutions that they regularly bank with or have their credit cards and car loans with but it doesn’t always pay to get your mortgage there.  By speaking to a mortgage agent or broker, you can shop around or more importantly they can shop around on your behalf.   Your mortgage agent will get you the best product and rate that works for you.  They have access to more than 40 lenders with different solutions and products, while the bank only has one – themselves.  Furthermore, the bank will push you to insure your mortgage and just like CMHC, the beneficiary of this insurance is the bank not you.

I remember when my husband and I went to get our first mortgage more than ten years ago – just like most, we went to our bank, thinking that since we had all of our business with them, it would make sense to get our mortgage there.  We were shocked when they offered us a rate that was higher than prime at the time and would not even consider a rate reduction based on our years of patronage.

On the advice of a friend, I called a mortgage agent and he was able to negotiate a great rate that was 2% lower.  It saved us years of mortgage interest and was a less stressful expeience overall.

Tip #7. Furthemore, rate is not the only thing you should be concerned with; you want to know if the mortgage will be compounded monthly or semi-annually.  Again this comes down to how much interest you will be paying – the less often the interest is compounded the better—semi-annual compounding could save you hundreds of dollars or more in interest.

Tip #8. Make sure you understand the difference between the variable rate and the fixed rate products, but more importantly how the penalties could affect you if you were to break the mortgage beforfe the term ends.  A variable rate mortgage will cost you 3 months interest, but a fixed rate mortgage will cost you the IRD, which is the difference between the posted rate and the discounted rate, multiplied by the number of months left on the mortgage.  In some cases it can cost you thousands of dollars in fees.

Tip #9. You want to take advantage of any and all prepayment privileges.  This can also help you pay your mortgage off faster as you can make annual prepayments of 10% to 20%, which goes directly towards the principal.  Not all mortgages allow this option so make sure that your broker factors this in, if this is important to you.

Tip #10. Finally and maybe most importantly, as it also has to do with budgeting and savings, is your payment schedule.  Don’t choose something that you can’t stick to, as it will make your life and that of your budgeting very difficult.  By paying bi-weekly instead of monthly, you put more money towards the principal as you have two extra payments every year.  However, if get paid monthly and you are now paying bi-weekly, you may find yourself stretched too thin.  Ask your broker to run different scenarios for you so you know what you can and cannot afford.  The last thing you want to do is get into a mortgage that you can’t afford.

Paying off your mortgage early will take lots of sacrifice, great budgeting and keeping steadfast to your goal, but if you can follow these tips, the rewards will be aplenty!

To Your Wealth!

Amina

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