Did You See The Pandemic Coming?
Are you enjoying the beautiful summer weather? I know I’m doing my best to be outside and soak up the freedom from being stuck in the house. But, just like many other humans during the pandemic, we bought a dog. Why? To get me moving again. Unfortunately, Klaus refused to walk me.
I love entertaining (can’t do that) networking events, one-on-one conversations with strangers, hanging out with people. I NEED people. I like people, well, not all people, but most people. Walter is my means of returning to the land of the living and moving, returning me to the outdoors. I had become so accustomed to being indoors and “staying safe” that I got out of the habit of getting outside. Thank you, Walter. Now, I bound, ok, not bound, but I’m out the door at 6:00 am, and we are off for a walk, then again in the evening. I am enjoying seeing people saying hello, as we pass on the sidewalk, getting social again. Ahhh, sweet freedom. Dang, pandemic. Does anyone else know what I’m talking about?
Who saw the pandemic coming? Life happens. It happens to us all.
Usually, when I am speaking with clients, I will say, “you don’t know what life is going to throw at you. Did you see a pandemic coming? I didn’t. And of course, interest rates are an essential part of what I do, but they are not the most important part of the mortgage agreement. So I often say, “Your mortgage is more than just a rate.”
Below you will find a list of just some of the reasons clients have terminated their mortgage early.
Reasons why people terminate their mortgage early:
- Pandemic – mental health – equity take to finance time off
- Purchased a new home
- Job loss
- Sold home
- The birth of a child – financing extended maternity/paternity leave
- Separation/Divorce
- Death of a partner/spouse
- Higher education
- Debt repayment
- Renovation
- Better rate
- Rate security
- Fire
- Death of a parent –
- Poor health –
- You want to buy a cottage – with your equity
- You want to buy a rental – with your equity
- You want to invest – with your equity
- You want to buy a business – with your equity
- You need to pay CRA – with your equity
Let’s look at a couple of less apparent scenarios and how your mortgage could be impacted.
Death of a parent: Let’s say you are about to inherit funds, fantastic, well, not fabulous, but you know what I mean. You now have a large sum of money, and you want to pay off your mortgage. Depending on your contract, you may not be allowed to pay off the mortgage? You could only terminate the mortgage by selling the home? Or you may have restricted or no pre-payment options. You will have a penalty, but calculating the penalty is super important; it could be the difference between a few thousand dollars and tens of thousands of dollars. Yep, these contracts are out there; when you only focus on rate, you miss the fine print. Don’t be seduced by a rate.
Health, recently, I broke two ribs. I am not telling you this for any other reason than one it hurt like a mother f’er. And two, what if this was a more severe accident. I’m lucky. I have a husband, an emergency fund and savings. I have a fantastic assistant, and I can work from anywhere as long as I can use a computer and phone. But, what if I didn’t have these things in place. What if my job was more physcial? What if I needed to use the equity in my home to pay for medical expenses and living expenses. When you tie yourself to a rate, you limit your ability to be nimble when times get tough. Don’t get me wrong, rates are a significant part of the process, but a good rate is a win with a great contract. Your interest rate shouldn’t be your sole focus.
These are just two examples of times when you may need to terminate a mortgage early, and I think you can see that what you think is a good deal now can cost you a lot in the future.
If you have questions about your rate, your contract or would like to review your mortgage, call me. I am happy to help.
Walter Update
He will be six months old on September 6/21
Loves – water, and well cared for grass
Heal – almost there
Stay – getting better
Come – ✔️ – a little regression
Biting – Work in progress – teething is almost done
Being nice to Sylvester (the cat) – Getting there
Weight – 64lbs
Paws – They are still huge, but he can shake a paw.
Understanding Refinancing
“My friend rolled their car loan and other debt into their mortgage. Can you do that for us?”
When someone says this to me, I know what they really want to do is use the equity they’ve built up in their home to help alleviate some of their financial pressure and free up cash-flow. And, yes, I can help with that!
What do you mean by ‘equity they’ve built up in their home’?
When you own a home you are building a sort of savings account. I like to call it the Forced Canadian Savings Account. As each year passes, your home likely increases in value. On top of that, you are paying down your mortgage. An asset you’re actively paying down is also increasing in value. Together, the two processes build equity.
Understanding Refinancing
“My friend rolled their car loan and other debt into their mortgage. Can you do that for us?”
When someone says this to me, I know what they really want to do is use the equity they’ve built up in their home to help alleviate some of their financial pressure and free up cash-flow. And, yes, I can help with that!
What do you mean by ‘equity they’ve built up in their home’?
When you own a home you are building a sort of savings account. I like to call it the Forced Canadian Savings Account. As each year passes, your home likely increases in value. On top of that, you are paying down your mortgage. An asset you’re actively paying down is also increasing in value. Together, the two processes build equity.
Wrapping Your Head Around Mortgage Penalties
You can scarcely go a week without hearing about mortgage rates in the news. There always seems to be something better out there! In the words of MoneySense magazine: “Being a homeowner with a mortgage can feel a bit like you’ve ordered the chicken dinner before realizing there was a steak special.”
No matter which way they’re predicted to go, you can’t help but wonder how mortgage rates affect you. Should you axe your current mortgage and hop onto a better rate at a different institution? Should you change up your terms so you can lock into a good rate for a long period of time? In theory, the sky’s the limit – provided you can stomach the penalties. I love educating homeowners about penalties, so let’s dive into the details.