Mortgage Renewal Strategies Whitehorse YT

What is your definition of "success" with your mortgage? Here we'll discuss the benefits of adopting a Renewal Strategy and shopping for the best terms for cutting total mortgage interest, which in turn will enable you to "fast forward" to the final mortgage payment.

RBC - Whitehorse Branch
(867) 667-6416
4110-4Th Ave
Whitehorse, YT
Languages
English, French
Office Hours
Monday: 09:30 - 16:00
Tuesday: 09:30 - 16:00
Wednesday: 09:30 - 16:00
Thursday: 09:30 - 16:00
Friday: 09:30 - 17:00
Saturday: Closed
Sunday: Closed

Scotiabank
(867) 667-6231
212 Main Street
Whitehorse, YT
 
Scotiabank
(867) 667-6231
212 Main Street
Whitehorse, YT
 
Canada Mortgage & Housing Corp
(867) 633-7542
Whitehorse, YT
 
Canada Mortgage & Housing Corp
(867) 633-7530
3106 3 Ave
Whitehorse, YT
 
First Nations Bank Of Canada - Whitehorse Branch
(888) 456-3622
Unit 103 9016 Quartz Road
Whitehorse, YT
 
First Nations Bank Of Canada - Whitehorse Branch
(888) 456-3622
Unit 103 9016 Quartz Road
Whitehorse, YT
 
RBC - Whitehorse Branch
(867) 667-6416
4110-4Th Ave
Whitehorse, YT
Languages
English, French
Office Hours
Monday: 09:30 - 16:00
Tuesday: 09:30 - 16:00
Wednesday: 09:30 - 16:00
Thursday: 09:30 - 16:00
Friday: 09:30 - 17:00
Saturday: Closed
Sunday: Closed

Societe Canadienne D'hypotheques Et De Logement
(867) 633-7530
3106 3 Ave
Whitehorse, YT
 

Mortgage Renewal Strategies

Provided By: Realty Times



by PJ Wade

It's strategies, not plans, that create progress in life and in real estate.

The mix of sudden shifts and long time frames associated with real estate can turn the best laid plans into "if only I'd" regrets. On the other hand, successful strategies incorporate flexibility into decision making because results matter every time.

Mortgages are one example among many where plans -- and the intentions they spawn -- may prove expensive. The longer it takes to repay the amount originally borrowed -- the principal -- the greater the total interest charge. According to a survey released this year by the federal Canada Mortgage and Housing Corporation, "Three-quarters of all respondents to the 2006 Mortgage Consumer Survey indicated that their goal is to pay off their mortgage as quickly as possible." This is a common plan, but paying off the mortgage in fifteen years or less is not commonplace. The financial complications of raising a family, establishing a career and living today's have-it-all-now lifestyles derail many plans and add to the cost of borrowing.

The first step in selecting strategies for success is to ensure you know exactly what "success" can and should be before you make any commitments. What is your definition of "success" with your mortgage? Most real estate purchases involve a mortgage or two, but this financing is usually treated as a means toward an end even though it may end up being as great an expense as the real estate itself. In fact, your mortgage may cost you more than your house.

Most buyers are tough negotiators during the purchase, intent on cutting as much as possible off the purchase price. As borrowers, they limit their plans to saving .25 or .5 percent on interest rates and taking on the maximum allowable monthly mortgage payments with no thought to what this approach will cost. This is like buying something on sale in a plan to save money only to pay for it with a credit card on which the continuing balance generates interest at rates that transform the savings into an over-payment.

Start Where You Mean To End Up

Yes, negotiate the best interest rate, but don't stop there. Adopt a Renewal Strategy and shop for the best terms for cutting total mortgage interest, which in turn will enable you to "fast forward" to the final mortgage payment.

You don't have to tackle this alone. Professional expertise helps you gain every advantage. Many borrowers stick with the bank that holds their chequing accounts rather than broadening their borrowing choices through a mortgage broker. This may not always be because consumers have made an actual choice. Stressed out in the midst of a real estate purchase, their bank may represent a comfort zone in the new, confusing world of mortgages, so they go no further. On the other hand, how many borrowers realize that a mortgage broker may be able to negotiate a better interest rate with the borrower's own bank than they could arrange themselves?

Since lenders and mortgage brokers have technology at their finger tips, ask them to demonstrate how the terms they offer you will affect the overall borrowing expense. They can calculate total interest costs over the range of terms you are considering. (Always ask for printouts of the figures they provide.) With actual interest amounts in mind, sticking to an accelerated-pay-off strategy is easier.

In the early years of a mortgage, very little principal is paid off. At the end of the term, interest rates may have risen which would mean higher monthly payments when the mortgage is renewed. Borrowers who are vulnerable to rate increases are usually encouraged to take longer terms, at least 5 years. Terms up to 30 years are available and may be a good investment if you believe the days of low rates will end soon. No one knows for sure, so select the strategy that you can live with if you're proven wrong in the future. Also secure prepayment terms that allow regular extra payments that are applied directly to reduce the principal without prohibitive penalties. Strategies to pay off even small amounts of principal make a significant impact on total interest costs.

Adopt a renewal strategy and you'll consistently aim for the shortest amortization period you can manage. This calculated time to repay the entire balance understandably has an inverse effect on monthly payments. The shorter the repayment period, the greater the monthly payments, but the benefit is that interest costs also decrease. Play with an online mortgage calculator and you'll see that shortening the amortization period by even a few years can save thousands in interest payments. For instance, a C$200,000 mortgage at 7 percent will mean C$220,250 in interest over 25 years, C$169,269 over 20 years, C$121,569 with a 15 year amortization and so on. Start with the shortest amortization period you can handle and then keep cutting away at it on each renewal and you'll slash interest costs.

Don't plan to just pay the required monthly principal and interest. Invest time learning which mortgage strategies will save you money so you can afford more real estate -- perhaps that cottage you've dreamed about.

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