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New House

This past weekend, my family finally moved into our new home.

This is the kids enjoying their first meal in the new house, while Jackie and I attempted to unpack the endless number of boxes.

Yep, no kitchen table, and a bucket of fried chicken… no parent of the year award for us anytime soon, lol.

The house we moved from was our family home nearly twelve years.  All three of our children were born in that home.

It was a bit emotional for both Jackie and I, and we thought it might be for the kids too… but it’s amazing how adaptable they are.

They did not skip a beat. They are loving the unfurnished home.

My two daughters are using the wide-open family room area to practice their gymnastics routines, while my son is doing a great job breaking in our new hardwood floors with his Hot Wheels.

We are often so consumed by the financialization or real estate, we lose sight of it’s real purpose… to provide shelter and comfort to real people.

Speaking of comfort… many homeowners with a mortgage are uncomfortable about their future mortgage renewals. And I can’t blame them, given how much rates have risen over the last 18 months.

To put it into perspective, in January 2022, RBC’s 5-year posted mortgage rate was 2.34%.

Today, it’s 6.50%.

On a $500,000 mortgage, that is a monthly payment difference of $2,200 vs $3,375. Yikes!

Nobody has a crystal ball that will tell us where rates will be when it comes time to renew, but my guess is that they will be higher than January 2022.

Here’s a quote from a Financial Post article last week, with their comments about future interest rates:

Senior deputy governor Carolyn Rogers said households and businesses in Canada should ready themselves for an era of borrowing costs higher than over the past 15 years, given the run-up in interest rates since the middle of 2021.

“It’s not hard to see a world where interest rate are persistently higher than what people have grown used to,” Rogers said in prepared remarks in Vancouver.

So if you are currently enjoying a lower interest rate, my advice is to try to maximize the benefit of that rate before the renewal date.

Here are some simple strategies for you…

  1. Maintain Your Current Payment Level: Plan ahead and try to engineer your budget so that you can continue to make payments at the same level you were making when interest rates were lower. This will result in more money going towards principal, helping you pay off your mortgage faster.
  2. Make Lump-Sum Payments: Whenever possible, make lump sum payments towards your mortgage principal. This could include using tax refunds, work bonuses or any other unexpected income.
  3. Accelerate Your Payment Frequency: Even if interest rates have increased, consider switching to bi-weekly payments if your lender allows it. This can result in extra payment each year and help you pay off your mortgage faster. Sometimes 7 years quicker than your planned amortization period and you could save thousands of dollars.
  4. Create a Dedicated Mortgage Payoff Fund: Open a separate savings account and contribute regularly to create a fund specifically for making extra mortgage payments. When you accumulate a significant amount, apply it towards the principal.
  5. Consider a Partial Mortgage Payment: Some lenders allow you to make partial pre-prepayments without penalties. Check with your mortgage agent or lender to see if you can make additionally payments towards the principal without any adverse consequences.
  6. Cut Discretionary Expenses: Re-evaluate your budget to identify areas where you can cut discretionary spending. Allocate the savings towards your mortgage payments.
  7.  Invest Windfalls Wisely: If you receive unexpected windfalls, such as an inheritance or large gift, consider using a portion of it to pay down your mortgage principal.
  8. Review & Adjust Your Budget Regularly: Periodically review your budget to identify areas where you can trim expenses or reallocate funds towards your mortgage. Adjust strategies as needed based on changes in your financial situation.
  9. Explore Debt Consolidation: If you have high interest debts, consider consolidating them into a lower interest  loan. Use the money saved to make extra mortgage payments.
  10. Refinance Strategically: While overall interest rates may have risen, there might be specific mortgage products or terms that could still offer you a lower rate. Explore your options to see if refinancing to a different type of mortgage makes sense for your situation.

The idea is that you pay less interest and keep more of your hard earned money for yourself and your family.

Maybe even invest your money into hard assets like real estate that can help protect it’s worth against inflation.

Our team would be more than happy to help you review your personal financial situation to determine if you can take advantage of these strategies.

Feel free to either respond to this email or call us at 519-255-9505 to speak with the team.

All the best,