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Getting Rid of Your Mortgage

Jackson Middleton • January 15, 2019

4 strategies to pay off your mortgage.

Mortgages are interesting to say the least. On the one hand it’s mortgages that empower homeownership, while on the other hand, they represent a huge amount of debt. And for most of us, the biggest debt we’ll ever have.

At Canadian Mortgage Experts, we understand that even though you work really hard to qualify for a mortgage, once you have it, you should want to get rid of it as quickly as possible.

So let’s look at four ways you can get rid of your mortgage.

Accelerate Your Payment Frequency

Sounds simple enough, but making the change from a monthly payment to an accelerated bi-weekly payment is one of the easiest ways to turbo-charge the repayment of your mortgage over time. Chances are you won’t even notice a difference.Typically, on monthly payments, your mortgage is split into 12 equal payments. Accelerated bi-weekly payments divide your payments in half, but rather than 24 payments, you make 26. It’s the extra 2 payments each year that accelerate the repayment of your mortgage.

Annual Financial/Mortgage Review

When you signed your original mortgage documents, chances are you locked into a term between 1-10 years. Most Canadians opt for the 5 year term and as such because they feel locked-in, they turn on the auto-pilot and rarely evaluate their mortgage mid-term. An annual mortgage review is a great idea, not because your mortgage has changed, but because most likely your financial situation has. Maybe you’ve gotten a raise at work, received a bonus or family inheritance. In this case you should consider increasing your mortgage payments or make a lump sum payment against the principal balance outstanding.

Call your Canadian Mortgage Expert at Renewal

Did you know that up to three quarters of Canadians simply sign the renewal letter they get from their lender without looking for a better deal? This can be a huge mistake. One of the best ways to make sure you’re paying the least amount of interest over the course of your mortgage, is to make sure that you get the best mortgage product every time you negotiate a new term. When your mortgage is up for renewal, make sure to talk with your Canadian Mortgage Expert. Don’t have one? That’s okay, contact CME directly and we'll help you find a broker near you!

Consider a Reverse Mortgage

Now, a reverse mortgage is still a mortgage, and in no way are we suggesting that it isn’t. However, if you’re in the later years of your life, you have a great deal of home equity, but for any number of reasons you’re struggling to meet the financial obligation of making payments on a standard mortgage, a reverse mortgage might be for you. A reverse mortgage is designed for seniors 55 years and older, requires no income or credit check to qualify and has no regular set repayment. Although a reverse mortgage is still debt, it’s the freedom you get from not making payments that will make you feel like your’e mortgage free.

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RRSP As A Downpayment

By DLC Canadian Mortgage Experts • December 28, 2022
Did you know there’s a program that allows you to use your RRSP to help come up with your downpayment to buy a home? It’s called the Home Buyer’s Plan (or HBP for short), and it’s made possible by the government of Canada. While the program is pretty straightforward, there are a few things you need to know. Your first home (with some exceptions) To qualify, you need to be buying your first home. However, when you look into the fine print, you find that technically, you must not have owned a home in the last four years or have lived in a house that your spouse owned in the previous four years. Another exception is for those with a disability or those helping someone with a disability. In this case, you can withdraw from an RRSP for a home purchase at any time. You have to pay back the RRSP You have 15 years to pay back the RRSP, and you start the second year after the withdrawal. While you won’t pay any tax on this particular withdrawal, it does come with some conditions. You’ll have to pay back the total amount you withdrew over 15 years. The CRA will send you an HBP Statement of Account every year to advise how much you owe the RRSP that year. Your repayments will not count as contributions as you’ve already received the tax break from those funds. Access to funds The funds you withdraw from the RRSP must have been there for at least 90 days. You can still technically withdraw the money from your RRSP and use it for your down-payment, but it won’t be tax-deductible and won’t be part of the HBP. You can access up to $35,000 individually or $70,00 per couple through the HBP. Please connect anytime if you’d like to know more about the HBP and how it could work for you as you plan your downpayment. It would be a pleasure to work with you.

Is There A Difference Between A Deposit And Downpayment

By DLC Canadian Mortgage Experts • December 21, 2022
If you’re new to the home buying process, it’s easy to get confused by some of the terms used. The purpose of this article is to clear up any confusion between the deposit and downpayment. What is a deposit? The deposit is the money included with a purchase contract as a sign of good faith when you offer to purchase a property. It’s the “consideration” that helps make up the contract and binds you to the agreement. Typically, you include a certified cheque or a bank draft that your real estate brokerage holds while negotiations are finalized when you offer to purchase a property. If your offer is accepted, your deposit is held in your Realtor’s trust account. If your offer is accepted and you commit to buying the property, your deposit is transferred to the lawyer’s trust account and included in your downpayment. If you aren’t able to reach an agreement, the deposit is refunded to you. However, if you commit to buying the property and don’t complete the transaction, your deposit could be forfeit to the seller. Your deposit goes ahead of the downpayment but makes up part of the downpayment. The amount you put forward as a deposit when negotiating the terms of a purchase contract is arbitrary, meaning there is no predefined or standard amount. Instead, it’s best to discuss this with your real estate professional as your deposit can be a negotiating factor in and of itself. A larger deposit may give you a better chance of having your offer accepted in a competitive situation. It also puts you on the hook for more if something changes down the line and you cannot complete the purchase. What is a downpayment? Your downpayment refers to the initial payment you make when buying a property through mortgage financing. In Canada, the minimum downpayment amount is 5%, as lenders can only lend up to 95% of the property’s value. Securing mortgage financing with anything less than 20% down is only made possible through mortgage default insurance. You can source your downpayment from your resources, the sale of a property, an RRSP, a gift from a family member, or borrowed funds. Example scenario Let’s say that you are looking to purchase a property worth $400k. You’re planning on making a downpayment of 10% or $40k. When you make the initial offer to buy the property, you put forward $10k as a deposit your real estate brokerage holds in their trust account. If everything checks out with the home inspection and you’re satisfied with financing, you can remove all conditions. Your $10k deposit is transferred to the lawyer’s trust account, where will add the remaining $30k for the downpayment. With your $40k downpayment made, once you sign the mortgage documents and cover the legal and closing costs, the lender will forward the remaining 90% in the form of a mortgage registered to your title, and you have officially purchased the property! If you have any questions about the difference between the deposit and the downpayment or any other mortgage terms, please connect anytime. It would be a pleasure to work with you.
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