When it comes to getting a mortgage, there’s a lot at stake. Mortgage rates can vary quite substantially depending on the factors listed below. The difference can mean a much higher or lower monthly payment and tens of thousands of dollars in interest payments over the life of the loan. Here are four tips to getting a good mortgage rate.
1. Set a Big Down Payment
It’s largely recommended to save at least 20 percent down before you sign for a mortgage – this will ensure you will get the best mortgage rates in the business. Simply put, a mortgage will be decided based on the risk factors involved. A loan with just five percent down will carry a much higher interest rate than a loan with 20 or more percent down. It’s also important to be aware that a low down payment may lead to having to pay private mortgage insurance.
2. Make Sure you Have Cash Reserves
Cash reserves are measured in terms of the number of months worth of house payments you have saved in cash. This can include money saved in checking or savings accounts, money market funds, or certificates of deposit. However, it generally does not include money in an RRSP (since it can only be withdrawn after paying fees). The typical requirement for cash reserves on a mortgage is two months, but be aware that higher risk loans typically require more in cash reserves.
3. Find the Best Mortgage Rate
Before you go searching high and low, start with your bank or credit union. It’s very likely that one or both will offer a preferred rates for customers that will be lower than what’s offered to the general public. Furthermore, since you’re a familiar client, there’s a better chance you will get approved will a lower interest rate. If you are still not satisfied, RateHub.ca is good online resource where you can compare mortgage rates based on your homebuying plans.
4. Be Financially Prepared
Applying for a mortgage can be stressful, but it becomes a whole lot easier when you have your ducks in a row before you get started. Take some time to improve your credit, pay down some debt, and start saving. It’s not just about shopping around, getting the best mortgage rate is also about getting your credit and finances in the best shape possible.
Composing a will is much like planning any other milestone event, but in addition to all the important and meticulous details you want to get right, there’s also a legal process to consider. With that in mind, here are five important things to consider before writing you will.
The law must be considered. A will that does not comply with the provincial legal rules in place is as good as no will at all. When and if a will becomes invalid, the financial fruits of your life’s work will be distrusted by the hand of a public trustee.
Although it happens rarely, it’s often recommended to have certain conditions in your will about incapacitation. This can be anticipated legally in your will by appointing an attorney for both your financial and medical decisions.
If necessary, certain stipulations can be place on the passing down/over your fortune to your beneficiaries. Children for example can be prevented from receiving inheritance before they are ready to use them responsibly. A binding will or an instructive but non-binding memorandum of wishes can be used to tell the executor how to proceed with assets. You can also set up predetermined dates and times for your assets to be passed down to young adults and children. This can also be done in several installments.
Most importantly, it’s crucial you prepare and find a suitable executor. Someone who is trustworthy and has direct access to each beneficiary. It’s the executor’s job to appoint accountants and lawyers to help the process, but ultimately it’s up to he or she to oversee the process and make sure everything is done correctly.
Feeling the RRSP overload? Set up an automated monthly RRSP contribution plan. An automated plan can help in a variety of ways – it can help your wallet and it can help your anxieties. Here are three ways an automated RRSP plan can benefit you.
1. Less stress equals better health
The immediate benefit of automation is the reduced stress of keeping on top it manually. During RRSP season, you can breathe easy knowing that everything is taken care of properly – no more last minute panic. Automation can also free up more time to think about other financial planning avenues such as TFSAs and other portfolio investments.
2. Never miss a deadline again
A big benefit to automation is the security knowing you will never miss out on a rebate again. By planning ahead, you can completely eliminate this stress altogether. Eventually, the automated contributions will be no burden to you at all, and with a guarantee on a rebate around holiday time, you and your family can rest easy knowing cash is on the way.
3. Financially, you are likely to come out ahead
Finally, by setting up for automatic RRSP contributions, you’re giving your money more time to wiggle forward. It’s simple – the longer your money is invested the better it does. Don’t just wait until the end of the year to invest, be sure to keep putting drops in the bucket on a consistent basis.
It’s quite easy to get locked into a long mortgage, with scheduled payments that seem to go on forever. But there are ways to make the light at the end of the tunnel a little closer. Just simply knowing your options go a long way. Here are three ways to pay off your mortgage faster.
1. Bi-Weekly Payments
Instead of making payments just 12 times a year, ask your mortgage holder to accept bi-weekly payments while slicing the monthly payment amount in half. This means you will actually be making 26 payments every year. Doesn’t seem right? Here’s the scoop: There are 13 four-week payment periods in a year, as opposed to 12 months, allowing the two extra biweekly payments. Though it doesn’t seem like a big difference, this can add up to a substantial amount.
2. Round Up
Rounding up your regular payment by a small amount, whether it is monthly or biweekly is another easy and relatively painless way to pay off your debt faster. If you normally pay $675 every couple of weeks, raise it up to $700.
With the bi-weekly payment method in particular, you likely won’t feel the small additional amount in your regular budget. TIP: A good time to round up is when you or your spouse get a raise.
3. Extra Payments
Whether it’s a work bonus or a tax refund, put in any extra money when it falls in your lap. While it’s common to have a mortgage that allows you to pay down an additional lump sum up to a fixed percentage of the total mortgage, be aware that mortgage terms can vary depending on the lender and your own financial situation.