TIME FOR A REVIEW!
Now that fixed interest rates have begun to trend back towards 3%, it is very important that you take the time to have your mortgage reviewed, here’s why……..
Most economists are forecasting that by the end of 2015, interest rates will begin to make their climb back to more “normal” levels. Historic norms for fixed 5 year interest rates are in the range of 5-6% and the 25 year average for the Prime rate (presently 3%) is approximately 5.25%. We also need to be aware of the fact that when rates begin to rise, the increase could be significant and happen very quickly. The reason for this is the that when the world banks begin to reverse the steps that were originally taken to prevent an economic disaster, the result will be to drastically reduce the money supply which could cause a sharp rise in rates.
As a result of these facts, we know that the question is not if rates will rise but when??….which leads to our advice to everyone…. HAVE YOUR MORTGAGE REVIEWED!!
Here are a few typical scenarios that cover most of our present clients:
1. If you are presently in a variable mortgage you should be monitoring interest rates so that you can “lock in” before they rise. We will notify you when we think rates are on the rise so please be sure to read our future emails for our market updates. However, what happens if rates rise suddenly and you miss it? To prevent this from happening, we can run a “hedging strategy” where we can approve you with another institution and lock in rates so that if rates rise too quickly, we can move you over to the new lender and the locked in rate. There could be a small penalty, but the savings over time will significantly exceed the costs.
2. If you are in a mortgage with a decent fixed rate that is maturing in the next few years, it may be wise to consider breaking your mortgage now to take advantage of the lower rates and to extend your maturity date. Doing so may incur a penalty but you will likely be replacing it with a new mortgage with a much lower rate (whether you go fixed or variable), thereby offsetting the penalty and providing huge future savings. Furthermore, you won’t be forced to sit and watch rates rise over the next few years and not have the ability to take action!
3. If you are currently in a “subprime” mortgage or have a high interest second mortgage, we may be able to restructure your mortgage if your credit has improved or if you property has appreciated. The new lower rate levels means that even the B lending rates have drastically reduced and we may be able to save you money even if we can’t move you over to an “A” lender.
4. If you are planning on consolidating high interest debt such as credit cards, finance company loans or unsecured line or credits, now is the time to act. Once again, rates are low so getting all your high interest rate debt rolled into your mortgage will enable you to reduce your payments, improve your cash flow and save interest.
When interest rates rose very suddenly last fall, many of you believed that you had missed out on your chance to lock in a fixed rate mortgage at or near 3%. As a result of rates falling back down to those levels, you have been given another opportunity to do so. Don’t miss out again!
Call us and request a mortgage review, it will cost you nothing and can save you thousands.
If you know anyone who is interested in mortgage financing, pass our name along! If the mortgage funds we will send you a $100 prepaid MasterCard.
Tony Miceli, Certified, Financial Planner (CFP)
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Mobile: 416 566 5476
Daniela Doukas, Administrative Assistant
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Office: 416 740 7443
60 Pippin Road, Unit 33
Vaughan, ON L4K 4M8