11 Apr

3 steps-how to own in your 20

General

Posted by: Angela Calla

There are many factors being overlooked by the media frenzy focusing on how unaffordable real estate is these days.

 Of course housing is more expensive than it was for our grandparents! Everyone has a similar family comparison of how a grandparent or aunt paid $50,000 for a home in 1954 and sold it for $600,000 in 2010! That’s a lot of years for home prices to rise!

 Have Canadians forgotten about the tax shelter that home ownership provides?

 We have TFSAs and RRSPs, but they can only help so much, especially when you have to invest, in most cases, after you have paid your housing expense.

 Real estate is often overlooked for tax reduction and deferral, let alone income generation and inflation protection.

 In the example above of the home purchased in 1954 and sold in 2010, there was $550,000 in equity that is Tax Free! Who can argue that doesn’t provide a good future lifestyle for whatever life can throw at you?

 Let’s take a look into the life of these homeowners who had four children and were able to help all of them with a down payment for their first homes.

 As they aged, they also ran into some health problems. They eventually ended up in long-term care, which cost $5,000 a month. No surprise that isn’t covered by a pension!

 They could go to their children. They have $5,000 a month to spare, right?! Not likely.

 Take a look at what you net on your income:

$50,000 gross = 40,465 net

 Are you depressed yet?

 To find your tax bracket, use the following chart: http://retirehappy.ca/marginal-tax-vs-average-tax

 How could you get that if you rent?

 Here is the profile of how to build this for yourself in your 20s in a year:

Earning $32,000/year ($16/hour full time).

Step 1: Save $12,000 – get aggressive by saving $1,000 per month! Live at home, take a bus, and do whatever it takes. If you have an excuse, you don’t want it badly enough.

Step 2: Buy a two-bedroom condo for $200,000 in either the Tri-cities, Surrey, Delta, Langley, Maple Ridge or Pitt Meadows. A member of our team will find one for you – and protect you with the best mortgage.

Acc Bi weekly mortgage payments = $478. MUST increase to $574 accelerated bi-weekly.

This mortgage paid off in approx 12 years!

Insurance and additional ways to pay your mortgage off faster:

Rent a room to your brother, co-worker, a student, etc, or even rent out your parking spot

Step 3: You now have $200,000 in Tax-Free money to build more wealth in your early thirties – Yes, please! (This is provided the property didn’t even increase in Value, which is unlikely over 12 years!)

Real estate is not a gamble long-term. Stop making excuses today! If you don’t make excuses, you can have it – I did this!

8 Apr

6 Details Banks Don’t Tell You That Cost Borrowers

General

Posted by: Angela Calla

Many borrowers have been focused on the wrong details when it comes to their mortgage. It’s NOT all about the interest rate. To focus solely on the interest rate can be a costly mistake. The difference between 10 basis points (eg, 3.39% vs 3.49%) on a $350,000 mortgage is a savings of $556 in interest throughout an entire 5-year term, and can actually cost you more than $18,000 by taking the lower rate!

There is a significant list of items that contribute to a larger cost by opting for the lowest rate without taking other factors into consideration.

Below are a few examples that clients were most surprised with this month:

1. If they have posted rates – the fees are at minimum double if not triple to exit your mortgage or make a change. Even if the lender beats the rate you’re getting upfront, it’s going to cost you! Example on a 300k mortgage $12k to exit vs $4500.

 2. Semi-monthly payments benefit the lenders, not you.

This is a trick that doesn’t help the borrower pay down the principal at all. We see time after time borrowers who “think” they were doing the right thing (accelerated bi-weekly payments, which actually help you pre-pay your mortgage an extra month’s worth of payments per year).  The borrower then gets stuck with that lender as they don’t have enough equity to move elsewhere. This can cause significant payment shock at the end of your term.

3. Life and disability insurance through your lender isn’t “really”portable.

True portability means that the insurance will follow your mortgage from lender to lender. Bank products only allow for portability If you remain with them, so this is a “half truth”. They may not be as competitive or have a product that suits you in the future. This is just another sales capture tactic. If you want true freedom, be sure to get independent insurance!

 4. Most lenders prefer to register a mortgage as a collateral charge that costs you money down the road.

Sure it has its place – it’s sold as a convenience – but be sure to read the fine print. You have to re-qualify and pay fees to access additional funds down the road. How is that convenient for you?

 5. Want the lender to include property taxes with your mortgage payment? Did you know they charge you for that option?

They also only pay your taxes annually, which means they’re sitting on your money. If you opt for automatic withdrawal from the city you live in directly, there can be up to a 1% discount. With some insured mortgages it’s mandatory for a while for them to collect your taxes and pay on your behalf, but it’s always best to keep your money in your control whenever you can!

6. Did you know that if you bought a home with mortgage insurance (most commonly but not always for a less than 20% down payment that is portable and you can do a top up?) The lender’s policy is to apply for new insurance to collect a new premium to increase the mortgage amount. They may not have the product you need the 2nd or 3rd time around if you qualify for a top up it saves you thousands. Also they have there own internal policies as to how long they will allow a transfer to happen with insurer’s. They are to avoid top up’s and get new policies…the price you can pay? On a 300k mortgage say for a self employed borrower $16,350.00 added to the 300 k instead of a few hundred dollars on average!

 The Angela Calla Mortgage Team can ensure you have clarity of all the pros and cons of the options out there for the lowest cost of home ownership contact us today at 604-802-3983 callateam@dominionlending.ca

3 Apr

Mortgage Freedom 10 years away for 37% of canadians

General

Posted by: Angela Calla

The dream of mortgage freedom is less than 10 years away for 37% of Canadian mortgage holders, according to Scotiabank’s Mortgage Landscape Study released yesterday.

More than two-thirds (68%) of mortgage holders have taken steps to pay off their mortgage faster, including increasing the frequency of regular payments (39%), increasing regular payment amounts (25%), and making additional lump sum payments (24%).

Of mortgage holders who agree that being mortgage-free faster is important (80%), the top cited reasons are to have more disposable income (30%), to pay off debt or to pay less interest (both 17%), and to save for retirement (11%).

The Angela Calla Mortgage Team puts a plan together to help every borrower become mortgage free as soon as possible with our on going mortgage plans and proactvie managment that is included with every mortgage done directly throught our team at no cost. Contact us today at callateam@dominionlending.ca 604-802-3983

3 Apr

Lower rates can cost you more

General

Posted by: Angela Calla

Borrowers beware

The 2.99% BMO five-year mortgage isn’t quite as good as it sounds.

BMO’s recent move to bring its rate below the psychologically significant 3% mark for fixed-rate five-year mortgages is being treated as a big deal because a similar move a year ago provoked then Finance Minister Jim Flaherty to admonish the bank. Joe Oliver, Flaherty’s successor, is taking a more laissez-faire attitude.

 

What BMO is offering until April 17th is a competitive rate in a mortgage with uncompetitive terms. Most important, you can’t break this mortgage before it comes up for renewal in five years unless you sell the property, refinance with BMO or do an early renewal into another BMO product. All the usual prepayment penalties would apply in these situations.

 

No Surprise every lender is out there to create a buzz. The Angela Calla Mortgage Team will get you the best mortgage that will save you the most amount of money over the term for the lowest cost of home ownership. Contact us at callateam@dominionlending.ca 604-802-3983