Home renovation shows are very popular today and are one of our favorite shows to watch. These shows are not only entertaining but tend to lead you to think how easy and quickly is to renovate your home. And we know that viewers enjoy the shows more when they are filmed in Canada as you recognize certain landmarks or streets which you see often when you watch shows like “Love it or List it Vancouver” and “Game of Homes”. However, the television shows are not realistic, highly edited and can mislead people on the renovation process.

Despite this we have become more knowledgeable about design and we definitely want the latest interior finishes and stylish open interiors that we see on television shows. Having said that, homeowners really need to understand what all the important factors should be considered when thinking a home renovation.

Financing:

Most home renovations shows do not talk about the financing aspect of the renovation. Before you commit to a renovation project, meet with a Mortgage Expert at Dominion Lending Centres to help you assess your financial situation. Every person’s financial needs and options are unique. When asked, most people say they are financing their renovation with a line of credit. While you are only required to make payments on the interest only, many people are under the impression that they can manage paying the interest and go ahead with the renovations. The danger with using this type of financing is that eventually the principal has to be paid and you end up paying huge interest costs.

A HELOC “home equity line of credit” will give you a lower interest rate… if you currently have one. If you don’t, you will need to have at least 35% of equity in your home to qualify for one (based on the current mortgage rules by the Bank Act). Currently, you can refinance up to 80% of the value of your home for a mortgage based on the appraised value. With today’s historical low interest rates, you will end up paying a higher interest rate on a line of credit or HELOC, and you are unlikely to pay down the principal compared to a lower interest rate with a closed mortgage where you pay principal and interest, saving you thousands in interest. Another thing to consider if you are unable to pay off the debt quickly is that you might be better off to refinance your mortgage. It might be more beneficial to get a one to five year locked mortgage below 3 per cent by saving interest up front and using your lender’s pre-payment privileges. If you currently have a fixed rate mortgage, find out what would be your penalty for paying it out early, it might still be worth it to refinance.

The budget:

On television, the designer has $80,000 to renovate an entire main floor including the kitchen and finish the downstairs basement. The question is – are those numbers realistic? The reality is that we, as viewers, are not aware what has been factored into those numbers by the television producers such as design fees, permits, labour, material costs, promotional giveaways, etc.

In order to have a realistic budget for your renovation, do research before you commit. Some people get set in a specific number set in their mind without knowing what is involved in the total scope of the renovation. It is critical in this step to work with a professional renovator as it will reduce surprises. Homeowners need to take responsibility for the renovator they select and for doing their homework. As a general rule, if the price is too good to be true, it probably is. So don’t automatically go for the lowest price.

A professional renovator will work with you to create a detailed budget and timeline for your project so you know what to expect. Once you start selecting materials it is a good idea to take the budget with you to ensure you stay within your budget. There are times that homeowners run out of money midway through the project because they made too many changes along the way or ended up selecting more expensive materials.

Timeline:

On television, renovations are completed within a few short weeks. The homeowners come in and are mesmerized by the transformation. The reality is that sometimes it can take up to eight weeks just for the kitchen cabinets to get built. Before you start your renovation, prepare a timeline with a renovator so you know what to expect.

By doing this, you will have an exact idea how long it will take to do the tasks and therefore plan accordingly. Also, it’s important to remember that quality, professional renovators aren’t necessarily available right away. Some are booked months in advance, depending on the project. In order to stay on track, materials have to be bought ahead of time and certain items could be out of stock. It might take additional time to get them or in some cases replace them. It is important to remember that even fast projects still take a few months, while bigger projects can take up to a year to complete. Therefore, you need to be prepared.

Design and planning:

On most of the renovation shows you have the interior designer come into the home with their assistants and an iPad and start moving walls and design the new space within minutes without consulting the clients. Most clients are not going to allow the designer take free reins without their input.

In real life, renovations can be boring compared to television. The reason is that there is no excitement because every step of the process is well planned. When it comes to structural changes in the home, such as moving walls, doors, windows or adding additions a structural engineer may be required in order to obtain a permits. A renovator needs to plan for these type of engineering costs and time delays in order to complete the project.

Summary, when you do your own renovations it may not have all the excitement that you have seen on the television shows but we do know this. When you take into consideration the above factors, you will be happy with the end result. One, which despite the time, effort and money, you will be proud to come home to.

Alisa Aragon

Dominion Lending Centres – Accredited Mortgage Professional

The two most frequently asked questions I get are:

1. What are your best rates?

2. What is the difference between fixed and variable rates?

Question #1 is actually more complicated than question #2. Why? Because rates are not the only thing you should be looking at when deciding what mortgage product to contract to. Recently, a client brought us a product that had a 1.99% fixed rate for a 5 year fixed term. This was extraordinary, and we did our due diligence to see what the product was all about. We found out that the term was 5 years and the interest rate was fixed at 1.99%…..for the first 6 months. Then it went up to the posted fixed rate of 3.15% for the remainder of the term. Not nearly as stellar as it appeared. Rule of thumb: If it is too good to be true, it is too good to be true! Make sure you know what your mortgage product entails. It is in your best interest to find out all the hidden costs behind the mortgage product that you don’t see up front.

Which leads us to question #2, What is the difference between fixed and variable rates?

Fixed Rates For the bank, this is a lower risk. It is usually higher than a variable rate. It remains constant or fixed for the term of the mortgage which means that your payments remain constant for the term of the mortgage. This rate is based on typical rates that are being offered by banks at the time the client enters into the mortgage contract. It’s a lot like “gas wars”. When you see gas stations that are in close proximity lower and raise their prices based on what the gas station across the street is doing, you see that these gas stations are competing with one another. It’s the same with banks. They watch each other’s prices and react to what’s going on “across the street”.

Variable Rates This is a higher risk rate for the bank. It is harder to qualify for this rate, which means the bank allows less debt in your financial profile compared to qualifying for a fixed rate. A variable rate can change during the term of the mortgage which means your actual mortgage payment can either increase or decrease during the term of the mortgage.

A variable rate is also a higher risk for the client as rates can go up which directly affects your payment amount. The last 15 years has seen rates generally decrease and clients that have taken advantage of the variable rate have not seen an increase in mortgage payments. But that’s not to say that it can turn at any time. Historically, we are at the lowest rates that we’ve seen but no one has a crystal ball.

Variable rates are quoted as Prime minus a certain amount or Prime plus a certain amount. What does this mean? Variable rates are based on the Bank of Canada, a governing institution for all Canadian banks. The Bank of Canada sets the benchmark for interest rates, based on inflation. Generally speaking, if the economy needs to be stimulated and is in a state of deflation, interest rates along with the Canadian dollar are lower. If the economy needs to be slowed down and is in a state of inflation, interest rates are higher along with the Canadian dollar. Currently, the benchmark rate for the bank of Canada is 2.5%. But most banks have adopted 2.7% as its Prime rate, basically because 2.5% is just too low for the bank. Thus, a bank might offer you Prime minus 0.2% (2.7% – 0.2% = 2.5%). Remember, the Bank of Canada reviews its benchmark rate about 8 times a year. Depending on the state of the economy, they may raise or decrease the benchmark rate which will affect your variable rate.

An example:

You enter into a contract rate of Prime – 0.2% (2.5%). 18 months later, there is a surge in foreign investment into the country which stimulates the economy. The Bank of Canada reviews its benchmark rate and decides to raise the benchmark rate to 2.75%. Your bank follows suit and raises its Prime rate from 2.7% to 3%. Your contracted rate for your mortgage is still Prime – 0.2%. But instead of 2.5% you are now paying 2.7%. Your mortgage payment will also go up to reflect the new rate.

For more information about fixed and variable rates please a mortgage professional at Dominion Lending Centres. We’d be pleased to answer any questions you have.

Geoff Lee

Dominion Lending Centres – Accredited Mortgage Professional

If you’re finding your family has grown out of your current home or your house could use a makeover to better fit your changing needs, renovating is a great option to examine. Instead of putting your home on the selling block and heading out shopping for a new home right away, it may be worth considering using some of your home equity to renovate so you can remain at your current address.

The first consideration is whether your home can be adjusted to meet your needs. Is your lot big enough for an addition? Will your foundation handle the weight of an extra floor? Does the tired look of your home require a major overhaul? Will the renovations add value to the home?

Plan out the changes you’d like to make and speak to professional renovators to seek several quotes before making your decision.

Next, depending on the complexity of the project, you have to decide if it’s worthwhile for you and your family to live in a construction zone for several weeks or even months while improvements are being made to your home.

Finally, unless you have a lot of money saved up, you have to weigh your finances to determine what makes the most financial sense to you and your family in the long run.

Weighing your finances

Now is a great time to think about making renovations to your existing home to create your dream home. With mortgage rates still sitting at historic lows, it makes sense to use some of your home equity to put towards renovations that could help you remain in the house you love, in the neighbourhood you desire that’s close to work, school and amenities to which you’ve grown accustomed.

Other possibilities include a home equity line of credit (HELOC) – where you can access money as required for each stage of your renovation – or even a construction mortgage may be your best bet. The key is to talk to your Dominion Lending Centres mortgage professional who has access to multiple financial institutions and products to ensure you get the most bang for your buck.

It’s important to weigh the renovation costs with the potential for your home to increase in value as well.

Moving can also be quite expensive. Possible costs to consider when moving include:

* real estate fees (upon selling your existing home)

* legal fees

* property transfer tax

* moving expenses

* decorating the new home

* mortgage penalty

Other considerations

The decision between renovating and upgrading to a new house is not solely financial. You should also consider your time, energy and peace of mind.

Each choice has advantages and disadvantages. When determining the best option for you and your family, consider the pros and cons of both renovating your existing home and moving to a new home.

By taking into account what you want to do, why you want to do it, the costs of the renovations and upgrades, and the value of your renovated home in relation to other homes in your neighbourhood versus the costs of buying a new home, you can determine which option is best for you.

Alisa Aragon

Dominion Lending Centres – Accredited Mortgage Professional

Each year from 2008 through 2010 the Federal Government reduced the maximum amortization as follows:

Purchases with less than 20% down –from 40–35 years, then 35- 30 and finally 30–25 years where it remains today.

Purchases with 20% or more down were cut from 40–35 years, and then from 35 – 30 (*certain lenders still offer 35 years to specific applicants).

Any risk within the real estate sector can most accurately be measured by the amount of equity in a property. Thus the focus on the purchases with less than 20% was more extreme, and logical.

The following table demonstrates the effect reducing the amortization by five years had at each point, an increasingly powerful effect. It essentially cancelled out the interest rate drops.

Today’s buyers do not qualify for radically higher mortgages thanks to lower rates, anyone who suggests otherwise has perhaps forgotten about the amortization effect. The final move from 30 years to 25 years has the same effective impact as a 1% interest rate increase.

Mortgage          Rate      AM                      Payment

$100,000              4.49        40                           446.26
$100,000              4.14        35                           449.08
$100,000              3.49        30                           447.09
$100,000              2.49        25                           447.47

Today’s buyers putting less than 20% down with a maximum amortization of 25 years at 2.49% basically qualify for the same amount of money as they did back in 2008 at 4.49% with a 40 year amortization.

Few clients are aware of this, and many Brokers are not either.

The next time you hear somebody saying that ‘today’s low rates have allowed borrowers to qualify for too much debt’ you will know better.

Interest rates are not quite the key driver behind the current boom in prices; interest rates play a role, but it is a much smaller one that people realize as the lower rates have been largely neutralized by shorter amortizations.

Perhaps the most important point of all to take away from this is that as interest rates rise the Federal Government will almost certainly extend amortizations back out, in turn negating the impact of rising rates.

Food for thought.

Dustan Woodhouse

Dominion Lending Centres – Accredited Mortgage Professional

A private mortgage can improve your financial well-being and using a reputable mortgage agent/broker will advise when it is suitable for your circumstances to enter into a private mortgage. Your mortgage agent will also advise a financial action plan to refinance you down the road to return to the prime lending marketplace.

Here are the facts on mortgage lending and when to use a private mortgage:

There are several types of mortgage loans in Canada including first mortgages, second mortgages and lines of credit. As we all know, these are available through well- known prime lending institutions like banks, credit unions, trust companies and independent financial institutions that only deal in mortgages to qualified borrowers.

There are also the institutional “alternative” lenders that have all the products mentioned above, however, they loan their money to individuals who do not meet prime lending guidelines. These loans would be considered “riskier” due to the fact that the borrower may not be able to prove income and may have challenged credit which will not meet the prime lender’s guidelines. These institutions often charge lender fees and higher interest rates. Institutional alternative mortgage lenders are most often used as a temporary solution that alleviates an immediate situation that once resolved, the mortgage is moved to a “prime” lending institution. Often times the alternative lenders restrict their lending areas, loan to value and credit and income criteria.

When a borrower doesn’t meet the alternative lender’s lending criteria, a private mortgage can be arranged for a temporary solution, just like the alternative lender. Investors/Lenders are usually individuals or private corporations, Self-Directed RRSP program lenders, who loan their own personal/corporate funds; believing investment in real estate is stable and want to earn a higher return on their money than they can make at their financial institution. These investors will take a more personal approach to the loan and are ready to hear your story, (usually with a sympathetic ear) and assess the amount of risk that they are being asked to take on. Income and credit is reviewed, but with less stringent guidelines than the alternative lenders. Again, lender fees and possibly brokerage fees will be charged.

Consider this scenario to explore why a private mortgage can work for you.

You worked for the same company for 10 years, they went bankrupt and shut down, it took you 9 months to find another job, but in the meantime, you used up all your savings as your EI payments weren’t enough. Your payments are behind on your $40,000 worth of debts which cost $800 monthly, and you owe $10,000 in property taxes and to CRA. Your house is worth $300,000, your current mortgage is $175,000, you need $50,000 to pay it all off plus $4,000 (estimated) to set up of a second mortgage including legal fees. It makes sense to retain your 2.25% first mortgage in order to give you time to restore your credit history and income. Therefore, a private second mortgage suits the situation. A second mortgage of $54,000 with interest only payments at 11% will cost you $484 monthly, creating a savings of $316 monthly plus CRA and the property taxes are paid off.

Some other reasons to borrow private funds.

• purchase property where you don’t qualify with more “traditional” lenders
• pay off/consolidate debts into your property
• renovate your home
• pay for medical expenses
• supplement your first mortgage
• improve cash flow
• pay off debts to CRA or property taxes
• pay for your children’s post-secondary education

Yes, private mortgages do have higher rates and fees, however, your mortgage agent is obligated to ensure that all parties to the transaction are fully aware of the costs going in and will provide the reason behind choosing a private mortgage. Your mortgage agent will outline why you don’t qualify for a prime or institutional lender at this time and review the financial benefits of entering into a private mortgage. Your mortgage agent will also explain the exit strategy to pay off the private mortgage down the road with the goal to get you back into the prime lending market.

Ask your Dominion Lending Centres mortgage broker if a private mortgage is right for you!

Anne Martin

Dominion Lending Centres – Accredited Mortgage Professional

1. Have you explored all your options. Once you receive your mortgage renewal statement, there is nothing easier than signing on for another term, heck 70% of everybody that received them from their current lender just signs over thousands of dollars. This may make sense in some cases, but your family and financial situation may changed over time. I can look for opportunities that may meet or exceed your current expectations.

2. Are you comfortable with your current payments. If your monthly payments are barely letting you break even each month then it might be time to reduce payments. On the other hand, if you are earning more income then why not pay down your mortgage faster and save thousands in interest over time. Have you reviewed your prepayment options?

3. Do you need cash flow for other things. Your priorities may have changed since you purchased the home. Things like your child(s) post secondary education, planning a career change or a major purchase may now be front and centre. With ‘today’s’ current market, there may now be access to additional equity in your home that can be used for other purposes.

4. Can you handle fluctuating rates. Some homeowners are comfortable with the ebb and flow of interest rates and some are not. It is best to base your decision on your personal situation and not what you read in the daily news. I can help you decide on a fixed or variable rate mortgage options, but ultimately it’s your decision.

5. Will you sell soon. If so, consider a shorter term mortgage that has flexible manageable terms if you decide to sell your home.

6. Are you thinking of a major renovation. Upgrades can increase the value of your home but the cost of having the work done can tie up a lot your money. Make sure to allow for ample finances to complete.

7. When do you want to be ‘mortgage-free.’ Increasing your payments will raise your monthly expenses now, but you will ultimately save thousands on interest in the long term. A mortgage-free lifestyle could be just around the corner.

8. Could you use your home equity to fulfill other goals. Refinancing a mortgage can be one way to free up cash you need for other things, which could even include purchasing another property.

9. Have your insurance needs changed. If your home equity has increased, there may not be the need for default insurance anymore.

10. Are you getting the best rates and terms. In a competitive mortgage environment your good credit history can make refinancing your mortgage work to your advantage. Dominion Lending Centres analyzes mortgage markets daily to ensure you don’t miss any money saving opportunities.

Michael Hallett

Dominion Lending Centres – Accredited Mortgage Professional

New credit reporting and what it says about you and your spending habits may make all the difference between you buying a home now or later.

When home buyers contact me to apply for a mortgage, I always review their credit report with them along with the rest of their application, before they start looking at homes with a Realtor. If there are any issues with the credit history we can determine the reason, the next course of action and how it will impact financing a purchase.

There is a lot of valuable information in a credit report which provides an overview for lenders about your ability to borrow money. Consistent late payments, collections and bankruptcy have the biggest impact on lowering your score. Running a high balance or over your limit on your credit cards will also drive your credit score down. Scores range from 300-900 and a difference in score by as little as 50 points says a lot to a lender about you as the borrower. For example, a score of 550-599 represents 21% of delinquencies while a score of 600-649 only 11%. Delinquency rates are defined as those who have late payments beyond 90 days. If your score falls from one bracket to the lower bracket with late payments or collections, the difference can affect the interest rate you can receive or, worse yet, if you can qualify for the mortgage amount you need.

The most recent software update for the credit bureau reporting system has added some features which could have a significant impact on reporting. The new reports, which were released in early 2015, show three credit scores and one overall score.

The first score ranks based on open credit and balance to limit ratio. So if you have lots of open credit and your balances are low or reasonable the score is higher. High balances or over limit on all credit cards will drop your score.

The second score ranks based on late payments and collections over $250. If your late payments are beyond 90 days, your score will drop dramatically.

The third score ranks based on the number of third party collections in the last 3 years and the oldest revolving credit. So if you have outstanding parking tickets or an unpaid gym membership that you forgot about — they will come back to haunt you.

These individual scores were created to show specific behaviour by a borrower and if the credit score is trending up or down. This can give the lender an indication of a chronic issues with a potential borrower or if they are consistent with their credit usage.

With mortgage payments, lines of credit, auto loans, credit cards and even cell phone bills now reporting on the credit report,  consumers have to be diligent with spending and paying bills on time.

I recommend to all my clients to keep your credit report clean — after all, it is your identity.

Establish at least two trade lines of a minimum of $2,000. One credit card and one personal line of credit for example.

Maintain lower balances (< 65%) on all lines of credit or credit cards.

Make payments a few days before they are due to ensure you are always on time

If you get a parking ticket, fight it and lose – pay the bill and don’t let it go to collection.

Look at your credit report annually and certainly 3-6 months before making any major purchase such as a car or home. To view your own credit report visit www.equifax.ca.

Pauline Tonkin

Dominion Lending Centres – Accredited Mortgage Professional

Interest rates are only one of many features that should be looked at when you are applying for a mortgage. But all things being equal, the interest rate may be more important than you think.

I was reviewing mortgage options with a client and the only thing they were interested in was the mortgage rate. There was no concern about all the other conditions that could end up being quite costly and since I could only offer him what he considered a small reduction, the client said “the bank’s rate was only a little higher and I feel more comfortable leaving everything I have with my bank for such a small difference.” What was the difference? I will get to that in a minute.

The mortgage renewal form you get in the mail is another cautionary note. I have had clients send me a copy of their renewal form. So far, in every case the renewal rate was higher than what I was currently able to get them. The last one I saw was .25% higher than what I could offer.

According to a recent Maritz/CAAMP survey, clients who used the services of a Mortgage Broker benefited with an interest rate .045% lower than those that dealt directly with their lenders.

So what does this fraction of a percentage mean for you? Let’s look at a $500,000 mortgage at 2.64% compared to 2.84%. That is only .2% or, to look at it a different way, it is about $50 a month or $600 a year savings by taking the 2.64% mortgage.

Here are a few options to increase net worth.

1. You take the 2.64% rate and you invest the $600 a year into a growth mutual fund that averages 10%. Even though over the years, as your mortgage goes down, the savings may not be as great, you make up the difference and keep investing that $600 a year for the next 30 years. That is a small difference, but in 30 years it has added up to over $100,000 in your tax free savings account.
2. You take out the 2.84% and say I like my bank and I am comfortable with the bank making the extra money and increasing their bottom line off my mortgage.
3. With interest rates being so low, you could look at increasing your cash flow by stretching out your amortization and lowering your payment. Then you take the extra cash flow and invest it with your financial adviser in your tax free savings account.
4. If you have extra equity in your home and have not contributed to your Tax Free Savings Account, consider refinancing and topping up your TFSA. As of 2016, the accumulative amount you can contribute is $51,000 per person 19 years or old in BC. So that would be $102,000 per couple. Invest that $102,000 and get an 8% return, you end up with $698,544 tax free money after 25 years and you paid back the mortgage and interest payments. If rates stayed the same throughout the 25 years at 2.69%, the whole $139,906 would be paid back. So you make a tax free profit of $558,638 by freeing up some capital to invest. Your total cost is $37,906 in interest.

There are many details to a mortgage and the rate is just one of them. Any of us here at Dominion Lending Centres would be happy to review your future mortgage needs to make sure you are maximizing your mortgage to your benefit.

Kevin Bay

Dominion Lending Centres – Accredited Mortgage Professional

When you are new to Canada and establishing credit, deciding on the best way to create a good credit history can be difficult.

You need a good credit rating in Canada if you are planning to rent or buy a home, buy a car or borrow money. By taking some important first steps to get your financial matters in order, you can establish a solid foundation for future credit worthiness.

The first steps when you are new to Canada and establishing credit are:

• Open a chequing and savings account with a local bank or credit union
• Get a cell phone through one of the local providers. Your payments on that account will report to the credit bureau.
• Apply for a secured credit card. Even if you start off with a limit of $500 you can always increase it at a later date. Pay some of your regular monthly bills (such as your cell phone or cable bill) through this credit card so you can start to show consistent repayment behaviour.
• Aim to establish a minimum of $2,000 credit limit with two credit cards or a loan and credit card. Lenders and the credit bureau consider two years of active credit use as a good foundation for credit worthiness.

I recommend you check your own credit report on an annual basis or within six months of making any major purchase. Visit www.Equifax.ca for more information.

For more information on establishing credit and managing your money visit www.mymoneycoach.ca.

Buyer Beware

There are many options available to people needing credit and some of them will get you into financial trouble if you are not careful. There are companies offering alternatives to credit cards. They often advertise online, by phone or flyers through the mail. They offer to provide loans that will help borrowers establish good credit. These programs all sound good until you look closely at the numbers. For more details, contact your local Dominion Lending Centres mortgage professional.

Pauline Tonkin

Dominion Lending Centres – Accredited Mortgage Professional

Do you have a Mortgage Action Plan (MAP)? If not, it’s time to plan your road MAP to mortgage free living. Every lender provides options, but very few take advantage of them. These mortgage benefits are called PREPAYMENT OPTIONS. The three most common prepayment options are: adjust the frequency at which the payments are made (weekly, semi-monthly, bi-weekly, monthly and accelerated), increase the monthly payment amount (there is a maximum monthly percentage) and lump sum (or balloon, also a maximum percentage of the original mortgage balance) payment. Make sure you know how to utilize them to the fullest and what your maximum amounts are. Don’t feel obligated to maximize the prepayment options but at the very least make extra payments, your retirement savings will thank you later.

Only 32% of all mortgage borrowers exercise their contractual right to make significant efforts to accelerate repayment, including taking one or more of the following actions in the past year:

• 16% have voluntarily increased their monthly payments.
• 15% have made a lump sum (balloon payment) contribution to their mortgage.
• 6% have adjust or increased their payment frequency.

Monthly Increase Payment

If choosing an accelerated bi-weekly repayment schedule does not work for your plan, then maybe you might be able to consider adding an extra principal payment to your regular monthly mortgage commitment. The graphic below illustrates how the principal amount is reduced when utilizing the monthly increase prepayment option. By adding $100 to your monthly mortgage you can save $10,729 in interest and reduce the life or the mortgage by 5.9 years.

My Personal Scenario

You are likely asking yourself right now, so what does Michael’s road MAP look like. Well, I’m happy to share that with you. My current lender allows me to increase my monthly payments by 15%, make a annual lump sum payment of 15% (of the original mortgage balance) and/or double up my contractual minimum monthly commitment. I have elected to exercise my contractual right to utilize the 15% monthly increase to the maximum. My monthly contractual payment is $2,074.98. By maximizing the 15% monthly increase my adjusted payment is $2,386.23 which is an extra $311.24 per month. If I had decided to only make the minimum monthly payments of $2,074.98 then the life of my mortgage would be 25 years remaining at the end of this current term (maturing July 2017). However, with the extra payment of $311.24 per month I’ve effectively reduced the life of my mortgage to (currently) 21 years 2 months, even less when it matures in 17 months. If I were to keep maintaining the same course of action as above for the entire life of the mortgage the revised amortization would be reduced from 30 years to 15 years 9 months saving me $114,827.94 in interest.

Why not join the 32%ers elite club?! The contribution can be minimal and usually unnoticeable on a day-to-day basis, the pay-off is years sooner though. The power of making extra payments is overwhelming. Ask any mortgage professional at Dominion Lending Centres how to increase your equity position. Your bank account will thank us later.

Michael Hallett

Dominion Lending Centres – Accredited Mortgage Professional