Mortgage Planning in 2017
December 27, 2016 | Posted by: Jay Meakin
Getting control of your biggest asset ( for most of us ).
Canadians are definitely talking about the housing market – what do the new mortgage rules mean, is this the right time to buy, have mortgage rates bottomed out, is a lender’s renewal offer the best available, and on and on! For many, it feels like some uncertain times ahead. Often it’s just a few sensible strategies that can help you survive and thrive in the current climate:
- Take care of your credit. It’s so important to have good credit behaviour so you always qualify for the best mortgage rate. Pay your bills on time (the secret is automatic minimum payment). Don’t let your credit accounts exceed 50% of the credit available. Before you cancel any credit cards, get advice. And don’t apply for a store card just to save on your purchase that day!
- Let renter pay your mortgage. A home with a rental suite or a carriage house can be a great option for homebuyers, especially if the area you love is pricey or you don’t want to buy a condo at a lower cost. It’s also a great option for existing homeowners looking to lower their mortgage payment.
- What’s the repayment penalty? If you ever need to get out of your mortgage early, the right mortgage could save you thousands! Not all lenders calculate penalties the same way, and the differences can be substantial. It helps to know which lenders have the most fair prepayment penalties and I’ve got that information at my fingertips.
- Choose low-interest debt. Whatever your need might be – paying down high-interest debt, funding education, a large purchase, investments, or renovations, your mortgage might be your most cost-effective financing option, if you have enough home equity.
- If you bought your first home in 2016 you may be able to take advantage of the $5,000 non-refundable Home Buyer Tax Credit amount, which provides up to $750 in federal tax relief. Not sure if you qualify, ask!
- Renovate over relocate? The right renovation might be all it takes to turn the house you’re in, into the home of your dreams. It is almost always less expensive to renovate than to relocate! I have great renovation financing options if that’s where you’re heading!
- Renew with your eyes open. When your lender sends out a letter suggesting you renew your mortgage at their current offer, get advice. Don’t renew with your eyes closed! This is your opportunity to negotiate the best possible deal!
- Speed up your mortgage pay-down. Change from monthly payments to weekly or bi-weekly payments. Or take your tax refund and put it against your mortgage principal. Your interest costs will go down with every dollar you’ve reduced on your principal.
- Don’t neglect your savings. In managing debt, you want to make sure you don’t need to use credit to get you through a financial emergency when your car breaks down or your washing machine quits. Make a point of setting aside a small sum every paycheque into a special emergency fund.
- Budget. This is the other 'B' word no one wants to hear ! I put this last because it shoud be the first thing you do. Sit down with your spouse or partner ( or your pet ) and get on the same page. This will probably take a few sit downs, but it's worth it. Set a goal to be done your budget by the end of January then review it at the end of each month. This is the best habit you'll ever form, trust me.
And lastly, it’s always a good idea to get expert mortgage advice well in advance of buying your home, and then always on an annual basis. So take the time to meet with your mortgage broker and get your blueprint for surviving and thriving in 2017.