Tag Archive for monthly mortgage payments

Laurin Jeffrey | May 1, 2011
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Pay down mortgage faster

Even though the average time to pay off a mortgage is about 25 years, you can speed up the process

By Anna Vozza, The Windsor Star

Buying a home and building equity over time is a great investment in your future.

While homebuyers can look forward to one day being “mortgage-free,” renters will continue to pay rent indefinitely and will likely see their rent payments increase significantly as time goes by.

Even though the average time to pay off a mortgage is about 25 years, you can speed up the process. When you are buying a home, ask your Realtor to advise you on ways you can pay down your mortgage as quickly as possible. This information will be helpful when you are arranging financing on your home and be sure to discuss these various options with your financial institution before choosing a mortgage.

AMORTIZATION SCHEDULE

One of the best ways to pay off your mortgage faster is to shorten the amortization period. By choosing a shorter amortization, you will not only pay for your home in less time, but you will make substantial savings in interest too.

For example, the most common mortgage amortization is 25 years. By shortening that period to 15 years, you will erode the amount of money you owe much more quickly and make fewer interest payments. Shortening the amortization period is not for everyone as it does mean larger payments, but for many people the benefit of long term savings is worth it.

Usually each mortgage payment is blended and applied to both the principal and interest so at the beginning, the interest portion of the payment is extremely high. However, with each payment, more and more of is applied to the principal. Ask your Realtor to give you examples of what your payments would be at the current interest rate amortized over 25 years as compared to 15 years.

PAYMENT OPTIONS

It used to be that most people made monthly mortgage payments, but weekly, biweekly and semi-monthly payments are more popular today. With these types of payment options you will reduce the amount of principal you owe faster because you make payments on a much more frequent basis and less interest is accrued. Many mortgages also offer homeowners the option of making an additional payment each year or increasing your payment each month. Making the equivalent of one extra payment a year can save you a considerable amount over time.

ANNIVERSARY DATE

Many mortgages allow you to make a lump sum payment on the anniversary date of your mortgage. Again this reduces the amount of money you pay interest on resulting in long term savings. It’s wise to find out what “pre-payment” privileges are available on the mortgage you choose.

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Contact the Jeffrey Team for more information  -  416-388-1960

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Laurin Jeffrey | January 3, 2011
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Homeowners can afford interest rate hike

REM Online

Canadian homeowners are comfortable with their mortgage debt, have significant home equity and could withstand an increase in their mortgage interest rate, according to the sixth Annual State of the Residential Mortgage Market report from the Canadian Association of Accredited Mortgage Professionals (CAAMP).

Among the findings of the report:

-  Eighty-four percent of Canadians with mortgages are able to afford at least a $300 increase in their monthly mortgage payments.

-  One in three (35%) mortgage holders have either increased their payments or made a lump sum payment on their mortgage in the last year.

-  Eighty-nine percent of Canadian homeowners have at least 10% equity in their homes and 80% have more than 20% equity.

-  Overall home equity is at 72% of the total value of housing in Canada; for homeowners who have mortgages, equity level averages 50%.

-  As of August 2010, there was $1.01 trillion in outstanding residential mortgage credit in Canada, an increase of 7.6% from last year.

“Canadians are being smart and responsible with their mortgages,” says Jim Murphy, president and CEO of CAAMP. “They are building equity in their homes and making informed, long-term mortgage decisions. The survey results speak to the strength of our mortgage market, especially when compared to the United States.”

The CAAMP report says most Canadians agree that buying a home is a good long-term investment and are focused on their mortgages to support that investment.

Many mortgage holders are making voluntary additional payments: 16% have increased monthly payments during the past year, 12% have made lump sum payments, and seven% did both.

The report says Canadians are exercising caution when taking out their mortgages, with a majority choosing a fixed rate (66%). A five-year fixed-rate mortgage remains the most popular option in Canada. Despite the fact that variable rate mortgages have become much less expensive compared to fixed rates, the majority choice is still fixed rates: this decision is based on people’s individual assessments of risk, not just the cost difference, says CAAMP.

Most of the people who have low tolerances for increased payments have fixed-rate mortgages. By the time their mortgages are due for renewal, their financial capacity will have expanded and their mortgage principal will have been reduced.

The report also says Canadians have been able to negotiate better than posted mortgage interest rates. For five-year fixed rate mortgages arranged in the past year, the average rate is 4.23%, which is 1.42 points lower than typical, advertised rates. Of the 1.4 million Canadians who renewed their mortgage in the past year, 72% were able to renegotiate a decreased rate: on average, rates are 1.09 percentage points less than the rates prior to renegotiating.

Canadians’ home equity is “impressively high,” says CAAMP. Among homeowners who have mortgages, the average amount of equity is about $146,000, or 50% of the average value of their homes.

The amount of equity take-out in the past year is unchanged from last year with around one in five homeowners, or 18%, taking equity out of their home, at an average of $46,000. The most common purpose for equity take-out is debt consolidation and repayment (45%) followed by home renovations (43%), purchases and education (19%) and then investments (16%).

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Contact the Jeffrey Team for more information  -  416-388-1960

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Laurin Jeffrey | April 21, 2010
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Why do women find home buying more stressful?

Chaya Cooperberg

When it comes to buying a home, women and men have one thing in common – both genders agree that owning a home will give them a sense of well-being and security. But that’s where the similarities end, according to surveys conducted by Genworth Financial Canada.

The research shows that even women in fairly strong financial positions tend to be more stressed and less confident than men when it comes to home buying. “Women are consistently more worried and anxious about finances and feel they have less understanding about the home buying process than men,” Genworth says.

The mortgage insurer found that 43% of the women surveyed, compared with 32% of men, find the home shopping process stressful. Three-quarters of women say it is important to have a simple and easy to understand mortgage structure. Only 60% of men feel the same way. And while half of the men surveyed want the security of low monthly mortgage payments, women were even more conservative, with 65% saying this is critical.

Over all, Genworth found that the women surveyed felt more anxiety than their male counterparts when thinking about their financial futures.

It would probably take a doctorate in women’s studies to identify all of the reasons for this, admittedly broadly generalized, crisis of confidence among us.

Nonetheless, Genworth gamely offers some tips to make home buying easier for both sides of the gender divide.

First, agree on what you want before looking. For example, how many bedrooms do you need? Is a double garage a deal breaker or a negotiable feature?

Second, set a limit before going out house hunting. You don’t want to get caught up in a bidding war that leads you outside of your comfort zone.

Third, get a pre-approved mortgage. This will help you and your partner understand what you can afford and give you the confidence to make an offer for a home.

Finally, educate yourselves as much as possible. With knowledge, comes power. You’ll feel less anxiety buying a home if you know you’re making an informed decision. To help first-time homebuyers understand the home buying process, Genworth Financial Canada has launched tools and resources at out www.homeownership.ca.

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Contact the Jeffrey Team for more information  -  416-388-1960

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