Annual reality check for your mortgage

Most of us tend to think of our mortgage as the ultimate “buy and hold” purchase. After all, who wants to spend any more time in the “borrower” chair than is absolutely necessary? You get a 5-year term, and then go on automatic pilot until it comes due again. You might wring your hands over your other finances, but your mortgage is set in stone, right?

Well, not exactly. In fact, it’s a great idea to have an annual mortgage review to see if it’s really working for you – especially in the context of the rest of your financial picture.  After all, a lot can happen in a year – especially during our “mortgage years”, when we tend to be juggling many commitments in our busy lives! Think of all the financial commitments we carry during these years: care of our children, tuition or school expenses, one or more cars, vacations, home renovations, travel… the list seems to go on and on.

Chances are that something in your financial life has changed since you took out your mortgage. Life doesn’t stand still, after all. The mortgage planners at Dominion Lending Centres  – an elite firm of Canadian mortgage brokers – have identified a list of the most common reasons why a mortgage may need some adjustment:

• You’re considering a move to a new home in the next year or two;
• You wonder if you can tap into some of your equity for a special renovation project to upgrade your home;
• You’re wondering if you can afford a vacation property;
• You’re considering the benefits of investment property ownership;
• You’re a bit concerned about a large expense looming in your future:  like university tuition, a wedding, a leave from work, a new career or business, a big vacation or a new vehicle, for example;
• You’re making more money – or less money – than you were when you began your mortgage;
• You’re carrying some credit card or other high-interest debt that is eating away at your monthly cash flow;
• You’re worried that you’re not saving enough for your retirement years, and you’ve heard there’s a way to convert your non-deductible mortgage debt into deductible investment loans using a re-advanceable mortgage.  You’re interested in collecting annual tax refunds, paying off your mortgage faster, and having an investment portfolio for the future.

If any of these sound familiar to you – and if you have held your mortgage for a year or more – then it’s worthwhile to contact a qualified mortgage planner to give your mortgage a reality check.

At Dominion Lending Centres , the company’s mortgage planners provide this service free of charge and with no obligation.  They tailor each mortgage to their client’s current needs and long-term goals, with an overall focus on mortgage planning, Mortgage Planners believe that a mortgage is not just a single transaction done in isolation of your goals and overall financial situation, but that a mortgage can accomplish so much more when property structured and integrated into your overall financial plan.

Mortgage Planners look at the mortgage as a financial keystone - the right mortgage can build your wealth, protect you from a financial downturn, and save you thousands of dollars. That’s why an annual mortgage review is part of their overall service offering.  It’s also a smart financial move for Canadian homeowners. Don't wait for your mortgage renewal date to contact your mortgage planner. You can reach me at http://davidcooke.ca or by phoning 403-836-1201.

Property Assessments as a measure of Value

 

When homeowners receive provincial Property Assessment notices, some will smile and have a bit more spring in their step, feeling the assessed value is accurate or perhaps even overly positive. Others will wilt and lament a modest gain or even a decrease in the assessed value over the previous year or period. Reactions will of course vary factoring in the potential increase in property taxes that tends to come along with stronger assessments.  The reality, setting aside taxation concerns, is that neither parties' emotions should be tied to the ‘value’ printed on these notices.  A provincial property assessment is an approximate value based on the (broadly) estimated market value as of the previous years. There is a lag time between the estimation of valuation and delivery of the envelope. It also fails to involve a formal site visit or viewing of the inside of the home to consider either significant upgrades or significant deterioration. To put this in perspective, few lenders will work with a detailed official appraisal report that is even 90 days old.  Most prefer a report    completed with 30 days, as markets can move significantly month over month. For these reasons, among others, a provincial property assessment should not be relied upon as a totally concrete indicator of value for the purposes of either purchase, sale, or financing. Always enlist a licensed professional, or perhaps even two or three, in order to get a timely and detailed appraisal of current market value. This will provide a much more accurate reflection of current market values reflecting recent comparable sales, value for zoning, renovations and/or other unique features to the property.  An appraiser is an educated, licensed, and heavily regulated third party offering an unbiased valuation of the property in question. Think of your provincial property assessment as something akin to a weather forecast spanning far larger and more diverse areas than the unique ecosystem that is your neighbourhood, street, and specific property. The forecast may call for rain in your city, yet you might have a ray of sunshine radiating upon your street specifically.

 

Tax Breaks for new home buyers

Well, it 's that time of year when we are doing our taxes. As you look for all your receipts and fill out your tax forms here's one tax credit you may qualify for.
 Did you buy a house in 2012? If so you may be eligible for a $750 tax credit. Check the CRA website to see if you qualify.
  Do you live in Calgary, Airdrie or Okotoks? Replacing your present toilet with a water reduction unit could get you up to $150 back from your municipality. This could pay for the toilet and then the water savings would all go directly into your pocket.
   Are you trying to save for a house? You will need a 5% down payment.  Did you know that you could use your RRSP's as part of your down payment.? Here's the strategy. Buy RRSPs and get a tax credit. Hold them for at least 91 days and then you can cash them out to use for the down payment.
  Note that you have to fill out forms at your bank or credit union to show that you will be paying these RRSP's back over the next 15 years to avoid having to pay income tax on the money you receive.
   This strategy can get you into a home now, while interest rates are low and home prices are still reasonable. While you are paying your mortgage down and building equity, you are also going to see your house value go up adding to existing equity.
  "but if I use this strategy I will have a mortgage and a RRSP payment at the same time, I'll be poor"
 No , not necessarily. Your mortgage payment should be pretty low and may be less than you have been paying for rent. As your RRSP only needs to be paid back over 15 years it's managable.
 If you cashed in $15,000 in RRSP's you would pay back $1000 per year or $83. a month. That's pretty manageable , isn't it?  If you need more information, you can visit my website at http://davidcooke.ca
There's plenty of information and informative videos. Feel free to contact me for more information as well.