Interest rates are still at record lows and are expected to remain unchanged over the next few months. Is this the time to consider leveraging your home equity to save a ton of interest on your debt?

Key benefits of debt consolidation:

1. Lower monthly payment to improve cash flow.

2. One monthly payment to simplify your finances.

3. It will lower your interest costs.

For example:

How much do you pay on a $10,000 balance on a…

1. Unsecured loan or line of credit at 5% = $42 monthly

2. Credit card at 18% = $124 monthly

3. Added to your mortgage at 2.59% = $22 monthly

It makes good financial sense to consider the savings and benefits when deciding whether or not debt consolidation is the right plan for you.

Interest rates are the lowest we have ever seen. If your mortgage is coming up for renewal, or if it makes sense to refinance and pay out some higher interest debt, the timing couldn’t be better.

 If, however,  refinancing isn’t an option, we would like to make a couple of recommendations that are easy to do and can save you a ton of interest.

1. Bi-weekly Accelerated Payments. If you can manage the  accelerated payments within your budget, you can knock 4.4 years off your mortgage.

2. Raise your bi-weekly payments by $10.00 each year for the remaining four years of your term, and you will knock another 9 years off your mortgage.

These are just a couple of easy -to-do suggestions to help you be mortgage-free sooner. Remember that every extra penny you pay over your regular payments comes right off the        principal. It’s a win-win!

How do they affect you?

The government changes affect all insured mortgages, so if you are putting less than 20% down, these changes will affect you.

· You must qualify at the benchmark posted rate (currently 4.64%) not the contract rate (which could be as low as 2.44%). The result? You will qualify for less.

· The property value must be less than $1 million dollars.

· Only principal residences qualify as insured mortgages;  mortgages on vacation and investment properties can no longer be high-ratio.

· Refinances no longer qualify as high-ratio mortgages; only purchases can have a mortgage of more than 80% of the value of your property.

These changes affect new mortgages only. When your mortgage comes up for renewal, if you do not add new money to the   principal, your amortization and terms will remain the same - even if you change lenders. Nothing will change except the interest rate.

Mortgage interest rates remain at record lows and are expected to remain low for another year. 

Would it make good financial sense for me to consider refinancing at this time before rates increase to:

  1.   Make an RRSP Investment. Always a good choice. You are investing in your future and creating a tax deductible expense, which is a win-win.

2.   Pay down some higher interest debt. This will save you a lot of interest and lower your monthly payments. The extra cash flow can be used to invest in RRSPs, make extra payments on your mortgage, or just relieve a lot of stress – all good reasons.

3. Invest in a TFSA -  This is an excellent choice for that comfort of having those emergency funds available for those unexpected expenses that may come up.   The interest earned is non-taxable and funds can be withdrawn anytime without any tax liability.  

3.   Renew my mortgage early. Does it make sense to take advantage of today’s lower rates and have peace of mind for the next five or ten years?

Call me any time and I would be happy to look at your options to see if refinancing is a good choice for you.