Monday, September 20, 2010

Getting in for the long haul

Today's newspaper had a great article about a man who locked into a 10 year mortgage. This may seem like an unusual thing to do in this day and age. However, 12% of Canadians are opting to go long and are taking mortgage terms of over 5 years. Why are these people doing this? Well, wouldn't it be nice to know that you will have the exact same payments until 2020? 10 year rates are presently in the 5% range. However, the cost for that security can be steep."The question is, is the insurance policy worthwhile?” says TD’s chief economist, Craig Alexander.

Today’s 10-year fixeds are guaranteed to cost roughly $6,900 more than a 5-year fixed over the first five years.* That’s $6,900 for every $100,000 in mortgage. So if your mortgage is $300,000, you’re paying a whopping $20,700 over 60 months for the “peace of mind” of a 10-year fixed. You can lower these costs by making pre-payments over the lifetme of the mortgage. Let's face it. In 5 years from now you should be making considerably more money than you are now. Increasing your payments or making lump sum payments can help to offset the higher costs of having a 10 year term.

This is why it is important to sit down with your mortgage advisor and discuss your options. If you know that your children will be reaching university in 5 years, having a mortgage rate set 5 years earlier and with your increased income, helping out with tuition costs may be do-able. Take the time to talk to your advisor and you can make an informed decision as to whether this is right for you.

“For many people it just might be (worthwhile)," Alexander says.
Getting in for the long haul
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Friday, September 10, 2010

Transportation improvements will increase house values

When the Ring Road and the new LRT stations are completed, communities within an 800-metre radius of these transportation improvements can anticipate a 10%–20% increase in their property values. The largest effect will be felt in older and more established neighbourhoods.

“Our research shows that when a highway increases accessibility to the region by providing new access or shorter commute times, residential property values rise by 12%–15% over similar properties not affected by the new highway,” says Don Campbell, author of the best-selling Real Estate Investing in Canada. “People need to understand that commute and travel distances are now measured in minutes, not kilometres.”

The 2010 Calgary Transportation Effect report reviews the peer-reviewed academic research that has been conducted on the impact of light rail, highway expansion and road improvements in other parts of the world.

The Calgary Transportation Effect report is available free to the public upon request by emailing the Real Estate Investment Network at
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