Financial Preparation around Christmas from your Saskatoon Mortgage Brokers

As we close on the ‘spending season’ it’s a timely reminder to be aware of the potential financial damage that can occur if you rely on short term debt to fund it. There are far better ways to approach this spending then relying on your credit cards.

Consider a family, they have an existing mortgage of $300,000 and on average have around $300 a month left after all bills/ spending etc. In December/ January with travel, holiday accommodation, presents plus entertainment they will spend an extra $3500 in this period. If this is put on the credit card (assuming 20% interest), and it has a zero balance at this point, and paid off at $300 a month from January it will take 14 months to zero this balance. So there will still be money owing at next Christmas!

As this monthly credit card repayment is basically accounting for all their surplus money it also means they are operating very inefficiently. When you owe $300,000 on a mortgage it seems crazy to be throwing your extra money into paying off a $3,500 debt. Put it this way, paying an extra $300 a month on a 30 year mortgage of $300,000 will save you $135,000 in interest costs, if not more.

Adding the $3500 into your home loan would make an almost unnoticeable difference into your monthly payments, however the $300 a month extra in to your mortgage makes a world of difference. This festive season it will certainly pay to get money savvy.

If you have a mortgage it is very important to manage this debt well, a mortgage plus other short-term debt will ensure you are paying them for the next 25-30 years when there is no reason it could not be 15-20 years.

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

First Time Home Buyer: Saving Money!

Want to be a First Time Home Buyer?

You’ve been saving money to buy your first home for so long and it’s one of the most significant purchases you’ll make in your life. But with all the details and parties involved, it’s easy to get confused or blindsided by hidden costs and fees. We can help – here are some tips to ensure you get the most for your money.

  1. Resolve credit issues before applying for a mortgage
    Your mortgage rate is partially determined by your consumer credit score, so fix what you can before you apply. Even little things like late payments or errors on your record (it happens!) can jack up your mortgage payments.
  2. Budget wisely and save for a down payment…even if it means waiting a little longer to buy
    It’s hard to be patient, but a decent down payment means more reasonable payments, saving you thousands over the duration of the mortgage.
  3. Shop around for mortgage rates
    Don’t assume the offer made to you by your bank or broker is set in stone. It will vary, especially if you make it clear that you’re comparison shopping! Closing costs and fees can also be negotiated – use them as bargaining chips.
  4. Don’t take listing prices at face value
    Found something you like? Research house values in the neighbourhood to be sure you’re dealing with a fair price. Your real estate agent can help, but you can also search for nearby listings online or attend open houses in the area.
  5. Use your RRSPs
    In Canada, first-time homebuyers can take advantage of a federal government program called the Home Buyers Plan (HBP) which allows you to take up to $25,000 from your RRSPs, tax-free.
  6. Don’t be scared to low-ball your offer
    New buyers can be timid when it’s time to buy, but unless you know you’re headed for a bidding war, low offers can be countered. So you may as well give it a shot!
  7. Make your offer contingent on closing dates
    It’s easy to overlook small details like closing dates in the rush of making an offer. But don’t risk the cost of paying for temporary accommodation and putting items in storage if you run into last minute changes.
  8. Get a list of fixtures and fittings included in the sale
    Check the details to avoid opening the door to your new home and finding it stripped of light fittings, cables and appliances. Also, pay attention to what you’re paying for: the seller may list the price they paid for an appliance, but from how long ago? Would it be more cost-effective for you to exclude it from the offer and buy a new one?
  9. Review your closing statement carefully
    With all the details that go into buying a home, it’s not unusual to find mistakes in the fine print. Be sure you check the math prior to closing, so you don’t overpay based on a simple clerical error.
  10. Opt for bi-weekly mortgage payments
    Paying monthly means that you make 12 payments per year. But if you pay half that amount every two weeks, you’ll make 26 payments, which means you’re paying down your mortgage faster.

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca