James Wong Richmond Mortgage Broker

How much can you save on mortgage interest payment?

Your savings can be as much as tens of thousands of dollars in interest payment. It is also possible to pay off your mortgage in about one-third the time on your 30 years mortgage. The great news is that you achieve this result by making the same regular monthly mortgage payment on your 30 years mortgage.

Most home owners are concerned about the mortgage interest rates they are paying. Good mortgage management goes far beyond getting a good rate. While most home owners are aware and express the desire to pay off their mortgages early, a more disciplined approach and active management of their mortgages can help them save thousands of dollars in mortgage interest payments.

Most home owners are already using accelerated mortgage repayment plan to pay off their mortgage. But, until now, no one has provided them with a “mortgage repayment accelerator” program that they can effectively take control of their mortgage repayment.

Money Merge Account

Pre-payment and weekly, bi-weekly payments are adopted by most home owners. A more concerted and aggressive mortgage repayment program can effectively reduce a 35 years mortgage to one-third the time, and saving home owners hundreds of thousands of dollars in mortgage interest. Wealth building through real estate investment is now so much easier with athe help of Money Merge Account software system.

More information on the Money Merge Account Program can be viewed here.

You can email me for more details on how you too can pay off your mortgage in one-third the time,and save thousands of dollars in mortgage interest payment.

If you are a Metro Vancouver first time home buyer, you need to consider the following issues:

1). How much mortgage? You need to find out how much mortgage financing you required. In addition to your down payment, you have to budget for expenditures on home furnishing, repairs, replacement of appliances, renovation, etc.

2). How much down payment do you have? The more down payment you can provide, the less you need to borrow for your mortgage. You may use your RRSP savings as down payment for your home. As a first time buyer your can withdraw up to $20,000 (or $40,000 per couple) tax free from your RRSP account.

3). High ratio mortgages. If you qualified can buy a home with as little as 5% or 0% down payment. If your down payment is less than 20% of the purchase price, you are required to buy a mortgage insurance. Click here for CMHC’s website on buying a home.

4). Pre-approval. When you are pre-approved, you know exactly what your price range, how much to borrow, the interest rate and your monthly payment. Pre-approval also helps in guaranteeing your mortgage rate for 90 days or 120 days depending on which bank.

The Government of Canada has 2 home purchase programs that help a first time buyer purchasing a home. You should find out if you are eligible to take advantage of these 2 programs, namely:

a) Property Transfer Tax Exemption
b) Home Buyer’s Plan - using your RRSP for down payment

For more information on home financing, kindly contact me at 604-721-4817 or email me.

You may not realize that you are richer than your think. If your nett after tax family income is $50,000 a year, you would have received $1.75 million over a 35 years period while working.

This is not a small sum of money. But, the question is, how do you manage the money you received, and how you use the money to build wealth for your family.

Building Wealth Through Real Estate

One of the best reasons to invest in real estate is leverage. With real estate, you can leverage to buy up to 4X or 5X the value of your investment. A 20% down payment for a $200,000 home requires you to put down $40,000. In 2 years with a 10% increase in value, your home is now worth $220,000. Your return on investment is $20,000, or 50% over a 2 years period.

Over the long term, real estate prices going up 5% a year is not unusual. In recent years, Greater Vancouver home prices had gone up double digit every year for the past 5 years.

Buying Your First Home

Buying your first home is not difficult if you have the income to qualify for financing. In the above example, you may be able to qualify for a loan around $256,000 at 5.25% interest rate, 30 years amortization. You can buy with as little as 5% down payment, or if your parents are able to help out, they can provide the 20% down payment you need.

Why Rent?

Renting is for short term and if you want to build wealth, you have to own your home and pay off your mortgage loan in the shortest possible time. A home say at $280,000 value can be rented at around $1,400 a month. Now, lets look at some numbers when you are owning your home.

If you can provide the 10% down payment, you will be financing your home with a $255,000 mortgage (including 2% mortgage insurance premium). Your monthly mortgage payment for the loan is around $1,400 a month. The cost home ownership is around $250 a month more than renting when you add your maintenance fees and property tax.

You initial mortgage principal pay down is at around $296 the first month, and this increases about a $1 a month more on principal repayment from the first month payment of $296 a month. This may not be much in way of savings compared with renting. But, as explained above, a 5% appreciation in value makes owning your home a winner.

Paying Off A 30-year Mortgage Sooner

You can pay of your 30 years mortgage in just over 11 years at the same monthly mortgage payment as your 30 years mortgage. A mortgage repayment accelerator program like Money Merge Account will optimize and accelerate paying off your mortgage.

Wealth building through the purchase of a second home can start as soon as you are comfortable with your finances, and the discipline involved in managing your mortgages. Finding the down payment for your second home can be worked out. There are many ways how this can be done. If you have built up enough equity, co-ownership with family members or your family income has increased substantially, you can plan on buying your second home.

You can view the latest Richmond and Greater Vancouver housing market information here.

If you like to find out how you too can benefit from real estate ownership, you can contact me at 604-721-4817 or email me.

Mortgage payment problem increases when home owners are faced with financial difficulties. A slowdown in the real estate market is seeing home prices dropping in many regions.

The recent drop in real-estate values is sending homeowners to the poor house. A recent Vancouver Sun article "Bankruptcies climb in B.C." high-lighted the blight of many home owners who are in financial difficulties.

Mortgage Delinquency

There is a close link between house prices and mortgage delinquency rates. Most delinquencies and foreclosures are often precipitated by life events such as the loss of employment, illness and divorce. However, the amount of equity in a home affects the ability or willingness of a homeowner to keep current on his or her mortgage payment. This is especially true for home buyers who bought in recent years, after a huge run up in home prices, and whose mortgages were secured with little or no down payment.

Maxed Out

These home owners have no flexibility to tap into the equity in the house to weather the financial difficulties. For borrowers who are able to afford their loans, they will have to cut back on their lifestyle expenses, or try to earn more income to cover their expenses.

In Canada, walking away from a mortgage loan obligation may not be an option for a home owner. Canadian mortgages are recourse loans that the mortgage lenders can continue to persue to recover the losses from borrowers even after the homes have been foreclosed. Click here to view a Global BC video segment on BC Real Estate Foreclosures Explode!

Second Mortgage Financing

If you have some equity in your home, you may be qualified for a loan. Generally, if the additional loan plus your first mortgage is less than 80% of your home value, you may be able to tap into your home for the money you need.

If you are in need of money, and your bank is not able to help, you can contact me at 604-721-4817 for a discussion. If you have the equity getting the money through second mortgage financing can be done in a matter of a few days.

Expect A Jump In Demand For Second Mortgages

Going Broke

Some Canadian home owners are maxed out! A home owner who is facing a serious financial problem and insolvency should read CBC's recent Personal Finance article "What to do when you can't pay your bills." There are not many options for a home owner to deal with the problem.

In recent months, personal bankruptcy has steadily increased. A recent Canwest News Service release, "Canada: Bankruptcy numbers rise" was pointing to a more difficult time for some Canadians.

A major cut back in personal spending and getting rid of major financial obligations have to be made.

Home owners demand for Vancouver second mortgage will go up due to dropping home prices, tight liquidity problems and tightened lending by Canadian banks. A home owner's personal and family finances will only improve when incomes and expenses are back into balance.

Second Mortgage Financing - A Short Term Solution

If a home owner has enough equity in his home, he may be able to take equity out to finance his emergency cash requirement. A home owner has to understand that second mortgage financing is only a short-term solution to solve his cash needs. A second mortgage may give a home owner the breathing space to sell his home at a more favorable price. Without a second mortgage to tie over the few critical months required by a home owner, his loss will be much more if his home is foreclosed.

A recent Global BC video segment " BC Real Estate Foreclosures Explode!" high-lighted the huge increase in foreclosures in BC.

If you are in need of a short-term loan, and like to find out whether you can borrow the fund your required, you are welcomed to contact me at 604-721-4817.

Note: Second mortgages are governed by BC's Mortgage Broker Act. Borrowers are expected to be provided with proper and full disclosures on the terms and conditions of the second mortgage loans.