Whatever the stage of your mortgage career you are it, you should always look for ways to reduce the interest payments you make to your bank. If there was a way to put less money in the banks pocket and leave more in yours, would you want to know about it?
Regardless of whether you are buying your first home or you are a seasoned investor, if it’s your first mortgage or your tenth, everyone should look to get the best possible deal and use the best available strategy to reach the inevitable goal of owning your home mortgage free. With the right advice, it can happen sooner than you think...
Find the right solution for you
Finding the right mortgage strategy can mean a lot to you in the long run. It can save you thousands of dollars over the life of the mortgage loan; on a $100,000 mortgage, it can easily mean as much as $10,000 in total. What you really want to be doing, in addition to finding the best mortgage rates is something entirely different. Find a way to reduce your total overall cost of home ownership.
How do I know or choose the right strategy for me?
First: Make sure you are working with an experienced professional mortgage planner. The largest financial transaction of your life is far too important to place into the hands of someone who is not capable of advising you properly and troubleshooting the issues that may arise along the way. But how can you tell?
Here are four simple questions your lender absolutely must be able to answer correctly. If they do not know the answers…RUN…DON’T WALK…to a lender that does!
What are mortgage interest rates based on? The only correct answer is the Bank of Canada rate for variable mortgages and mortgage backed securities, specialized mortgage bonds, or Government of Canada Long Bonds for fixed rates. A professional mortgage originator ought to at least know the basics of how your interest rate is determined. Do not work with a lender who has their eyes on the wrong indicators, or worse yet, has no idea what the indicators even are. At the Vantage Mortgage Group we constantly review these indicators and you can therefore be confident in our ability to suggest sound mortgage strategies up front and to manage your mortgage for the long term.
What is happening in the market today, and what do you see in the near future and why? If a lender cannot explain how Mortgage bonds and interest rates interact and where they are headed, why would you trust their advice for your costliest investment?
What strategy are you recommending and why? The key here is the word “strategy”. If a lender cannot clearly articulate the strategy behind their recommendations to you then they are simply quoting a rate, and quite frankly anyone can do that. On your largest investment make sure you are dealing with someone who has a solid financial plan that is considering your overall financial wellness for you.
What commitment are you giving me to personally manage my mortgage over the long term? This is the most critical question of all. Many lenders, especially bank personnel, have no desire or ability to proactively manage your mortgage over the long haul. How can you take advantage of changing markets in the future if no one is watching them for you? What if the long term rate you are considering today drops significantly in a few years? Who will ensure you don’t miss an opportunity to renegotiate? If you are considering a variable rate mortgage why would you do this with someone who is not committed to keeping an eye on it? At the Vantage Mortgage Group we truly believe our real job begins when your mortgage funds. Anyone can sell you a mortgage but only truly committed mortgage professionals can manage that mortgage over the long term. With this long term management approach we can significantly reduce your total cost of home ownership, isn’t that the point?
What are the different strategies?
To choose the right mortgage strategy, one must have intimate knowledge of each mortgage strategy that is available (both the good points and the bad points), can calculate where you stand in the interest rate cycle and make an educated guess about the interest rate directions over the next decade.
There are several basic strategies, each able to be combined with several options, and it is often advantageous to combine two strategies to take advantage of the market.
The basic mortgage strategies:
5 times 5 – renew a mortgage five times with a fixed term of five years.
Mortgage Inflation Hedge Strategy – Protect your mortgage against future rate increases
Building Futures Plan
Tax Deductable Mortgage strategy - Interest payment deductions: a strategy that allows you to eventually deduct interest paid on a private house from your personal taxes (salaried or self-employed worker).
Variable rate – mortgage whose rate changes with the base rate of the Bank of Canada.
Reverse mortgage or Retirement income – an efficient manner of using the equity in your home to supplement retirement income.
Poor credit – help repair a poor credit rating in order to obtain an excellent rate in the future.
By comparing these strategies and others, you will learn to appreciate what good mortgage planning can do, and enjoy savings money over the entire life of your mortgage. A good strategy is 10 times more valuable than simply negotiating the best interest rate. Each strategy deserves its own personal explanation and should be coupled with your long-term objectives and the current state of the Canadian economy.
All of this points to only one thing-you really need a professional who is looking out for your best interests in order to find the perfect mortgage loan strategy. The best thing about this approach is that you will learn a lot about your situation and the economy, and this education is all free so call today!
BE SMART...ASK QUESTIONS…GET ANSWERS!
More than likely this is one of the largest and most important financial transactions you will ever make. You might do this only four or five times in your life…but we do this every single day, and have been doing it for over 10 years! It is your home, and your future. It’s our profession and our passion. We’re ready to work for your best interest!
Some conditions may apply. Rates are subject to change without notice