Divorce your mortgage and debts
If you’re carrying a mortgage with an interest rate higher than 4% or debts that are costing you more than $300 a month, it’s time to divorce your debts with a new mortgage restructure.
Let’s face it, you’re not only in a partnership with your spouse or significant other, but also the debts that you have could easily outlive your marriage or life. With 6 out of 10 Canadians living paycheque to paycheque, one little change or short hours in a pay period could really have an impact on your finances!
The good news is that, in today’s market – and thanks to historically low interest rates – it has never been easier to divorce your mortgage and debts.
Let me show you how to make 2012 your year to reduce debt!
Mortgage Divorce: Out with the Old
Example: $300,000 mortgage with a 35-year amortization
. 2007 average 5-year fixed interest rate: 5.89%
Restructured Mortgage: In with the New
2011 average: 3.39%
. An interest rate of 3.39% = a $1,325 monthly mortgage payment
. An interest rate of 5.89% = a $1,764 monthly mortgage payment
. This translates into a $439 monthly savings or $5,368 more in your
pocket each year!
. It also means taking more than 10 years off the length of your
. To earn an extra $439 per month net (after taxes) at a $20 an hour
job, you have to work three days
The minimum payment on a $10,000 loan should be $300, but for some loans (the most profitable for the lenders – that’s why they tend to also be easy to access) they can be as low as $10. This will last longer than most marriages – and lives for that matter. This would take to 70 years to pay off with more than $100,000 in interest for the original $10,000 loan. If you add that time period to your current age, it sure doesn’t feel empowering – even if you’re only 20!
With the new proper “relationship” with your mortgage and debts, using the same example above, you can increase your monthly payment with a new mortgage structure (still saving more than $300 a month) and be debt free a decade earlier!
This is a divorce where you won’t have child or spousal support, and it will actually add quality years to your life with you family.
Angela Calla, AMP
Dominion Lending Centres-Angela Calla
AMP of the Year in 2009
Host of ” The Mortgage Show” Saturdays @ 7pm on CKNW AM980 Phone : 604-802-3983 Fax: 604-939-8795