Our House

DoMinion LEnDing CEntRES OUR HOUSE SUMMER 2017 >> 41 win out over fixed rates. By paying more than is required, you will pay off the mortgage faster. it's also a buffer in case the rate rises above the fixed rate for short periods of time. CaUtion: variable rates are not for everyone. get independent professional advice to find out what is best for you. 10 TakE yOUR mORTgagE wiTH yOU When you move, switch your old mortgage to the new property to avoid a penalty or higher rate on a new mortgage. this is called "porting." Make sure that your mortgage has this feature. it is not widely known and could save you a ton of dough. 11 SET Up aUTOmaTic SavingS Set aside even $10 off every paycheque. When it reaches the amount of one mortgage payment, apply it to the mortgage. this concept goes nicely with #4. 12 UnHOOk fROm THE mOnEy dRip Just stop paying with your fancy points credit or debit card. these make it way too easy to overspend. go old school, go off the grid and pay cash. it works! 13 dOn'T EvER bUy On layaway You know, those six-months- don't-pay schemes. You think, "no problem, i'll just pay it in six months, it will be okay." Yeah, right. 14 dOwnSizE yOUR HOUSE two good friends and clients of mine, having followed many of the tips here, are in great shape, except they have a six- bedroom house. two people, six beds—go figure. they are nearly debt-free, so no biggy, but can you say the same? Circumstances change; make the adjustments along the way. 15 REnT OUT THE baSEmEnT Don't want to move? Convert spare rooms to rental and use the income to pay down debt. 16 makE yOUR mORTgagE Tax-dEdUcTiblE if you are self-employed, own rental property or have invest- ments, this is likely possible. i won't go into details here; just ask your DLC mortgage broker. 17 HavE a paymEnT pRiORiTy Define your various debts by category. 18 pay Off THE dEbT wiTH THE HigHEST inTEREST RaTE fiRST 19 pay Tax-dEdUcTiblE lOanS Off laST and slowest. Pay the non-tax- deductible loans first and fastest. 20 pay Off Ugly dEbT fiRST Stuff like credit card balances. 21 payOff bad dEbT nExT Stuff like car loans, boat loans. things that depreciate in value. 22 pay Off gOOd dEbT laST Stuff like mortgages, investment loans. Debt for assets that should appreciate in value is the least harmful to your net worth. 23 bUy a nEw caR OUTRigHT Finance it if you have to; don't lease. Exception: if you are self- employed leasing might make sense. 24 USE yOUR SEcRET STaSH You have $20,000 in a bank account for a rainy-day fund and $20,000 owing on a line of credit. Seriously? the bank account is paying you next to no interest (which is taxable income to boot) and the line of credit rate is way higher (and not tax deductible). You know what to do. You can keep the line of credit open and on standby for a rainy day. Make it the secret line of credit that you have but never use. 25 givE yOUR bankER mORE mOnEy no, really. Keep enough in your chequing account to meet the minimum requirement to waive your service charges. Some banks charge a fee for transactions and nothing, zero, zilch, zip if you keep $2,500 in the account. Let's see, $10 x 12 is $120 a year to pay off debt. i'd have to earn 5% with the $2,500 in my savings account to come out ahead. no-brainer here. oh yeah, if you need more than 25 transactions a month, see #12 above. bOnUS Tip (and most important) Let's face it, you're not the government and you're not a bank. You can't run deficits forever and you won't get a bailout. So stop procrastinating already! See 1 through 25 above and take action now. Len Anderson is a Dominion Lending Centres accredited mortgage professional based in Vancouver, B.C. Imagine if you bumped the payment 10% EvERy yEaR from the get-go. You would be mortgage-free in 13 years! Borrower BewAre be wary of some too-good-to-be-true, ultra-low-rate mortgages. These "no frills" mortgages are often loaded with restrictions like pre-payment limitations, fully-closed terms, stripped-out features, or unusual penalties. you really need to compare product to product. if you're not looking at what you're giving up, you may regret it in the future. This alone could prevent you from taking advantage of tips #1, 2, 3, 4, 5, 7, 8, 9, 10, 14, 16 and 22.

• Cover