Property ownership can be a great way to build net worth, but for many of us it can also be the source of our largest debt. Managing debt is as important to wealth building as managing your investments. With proper mortgage planning you can reduce interest costs, manage cash flow, and most importantly, avoid large breakage penalties.
Are you managing your mortgage?
- My term lines up with my ownership timeline. Most people look at interest rate only when determining their mortgage product. Interest rate does impact the cost of your mortgage, but it won’t have the greatest impact. The largest cost factor is breakage penalties and the key to avoiding them is lining up your term with how long you plan to own a property.
- My rate is competitive. You may save money by paying a breakage fee to take advantage of today’s low interest rates.
- I have options that allow me to pay my mortgage down faster. Banks and lenders vary on the type of pre-payment options they allow on their mortgages. The more flexible they are, the more likely you are to make pre-payments and reach mortgage freedom faster.
- I proactively manage my mortgage renewals. You can save money by planning ahead. Rate holds are available 120 days prior to your renewal date. If rates move up before your renewal date you are protected. You can save by talking to a mortage professional early in the renewal process.
- My mortgage meets my other financial goals. The best mortgage option for you is also determined by the type of property and your other financial goals. For example, if you have a rental property, a positive monthly cashflow may be more important to you than mortgage freedom.
- My bank or broker is helping me save money. The service that banks and brokers offer varies greatly. Are you getting annual follow-up, renewal reminders, and current rate information? Will they call you if you can save money by refinancing? Did you receive information about the pre-payment options available to you? Are you getting the expert mortgage advice you need to reach your financial goals sooner?
- I’ve considered debt consolidation. If you have high interest debt and own your home, you may benefit from refinancing. This is a good fit if you can use your interest savings to pay your mortgage off faster.
If you are interested in having a free mortgage review to see if your mortgage is still working for you, please contact me. I also offer a free renewal reminder if you provide your mortgage maturity date. All of my current clients are already set up to receive mortgage renewal reminders.