Getting a Mortgage: Is 20 the New 30?

There’s a bright side to the debt crisis that’s plaguing Europe and increasing the risk of sinking the global economy into recession again.Interest rates on mortgages are at record lows. Mortgage financing advice for today’s home buyers includes a few new twists.

The fixed rate mortgage with a 30 year term has traditionally been the most popular used by home buyers in the past. But today’s generation of home buyers may be well advised to consider a 20-year mortgage. There are several advantages to doing this.

The biggest advantage is the significant interest saved over the term of the loan. Let’s say you bought a home and took out a $200,000 mortgage with a 30 year term and an interest rate of 4.75%. The monthly payment would be about $1,043 and the total interest paid over the life of the mortgage would be about $175,600.

But instead, you could borrow the same $200,000 at 4.5% interest rate for a 20-year mortgage. Mortgages with a 20 year term can come with an interest rate that is about a quarter of a percentage point lower. The monthly payment on this mortgage would be about $1,265 and the total interest paid over the life of the mortgage would be $103,670. But take a closer look at the difference and it is surprising. The 20-year mortgage in this example has a monthly payment that is only $222 higher. But the amount of interest paid is almost $72,000 less than the total interest paid on the 30-year mortgage, which is a significant savings.

Another advantage of a 20-year mortgage is that it will be paid off earlier. This can be a big advantage for young home buyers who are planning to have children. They can be free of mortgage payments just at the time their children going to college. This means they’ll have more cash flow in time to help pay tuition bills.

But some home buyers will need to start with the more affordable monthly payment of a 30-year mortgage but want the savings of the 20-year mortgage. They can take out a 30-year mortgage and make a few extra payments each year, which will lower the loan balance more quickly producing almost the same savings of the 20-year mortgage. You can calculate your situation with tools online like this.

Just make sure to instruct your lender in writing that the extra payments are to be used only to reduce the loan balance.

Check in later this week when I’ll tell you what works for homeowners who are looking to refinance their current mortgage.

For More Information feel free to call Brad Adams at White House Mortgages, Dominion Lending Centres in Kelowna at 250.826.5679 or adams.mortgage@shaw.ca

Credit Score Estimator

Canadian Mortgage Calculator

Income Requirement Calculator

Mortgage Affordability Calculator

Kelowna Mortgage Loan Calculators

Writing a 100 word Explanation to your Credit Report

How to add a written statement to your credit report

You can put a 100-word letter of explanation in your file for lenders to see

Want to buy a house? Get a better credit card rate? Score a decent car loan? When it comes to telling your financial story, your credit report -- and the credit score determined by it -- always seems to have the last word. But you can write 100 of those words yourself. As a Mortgage Broker in Kelowna one of the first things I look at when people are wanting to buy real estate or to refinance is their credit score.

A provision of the Fair Credit Reporting Act allows you to add a 100-word letter to your credit report that can cover "any number of items or topics they wish," according to Steven Katz, a spokesman for credit bureau TransUnion. Whether you use it to explain a dispute, a mistake or your own personal money apocalypse, the statement theoretically gives you more of a voice in your financial future.

There's a lot of flexibility in the Act. For example, it allows, but doesn't require, credit bureaus to limit the consumer statement to just 100 words, and the Big Two--TransUnion and Equifax -- do just that. It also doesn't specify how many statements an individual can add to their report, and the credit bureaus differ on this.  TransUnion allows you to file both a statement of dispute and a consumer statement. Equifax allows only one statement on your credit report at a time, period.

Still, regardless of how much you're able to write, a larger question remains: Do the 100-word letters actually work to a consumer's advantage?

Know when to speak up
As a credit counselor and representative of Clearpoint Financial Services, in Richmond, Va., Bruce McClary knew all the right moves to make when he noticed a fraudulent cell phone account on his credit report -- the result of identity theft. He immediately contacted the cell phone company's fraud department, filed an affidavit with local authorities and sent copies of the documentation to the three major credit reporting agencies.

Despite his precautions, McClary knew that on his credit report, the situation could raise curiosity, maybe even red flags. "There was a fraud alert on my report, but I knew that if anyone pulled my credit report, they might be hungry for a little more detail as to what was going on and why it was happening." McClary whipped up a personal statement to explain the situation and the ongoing investigation. Even after the credit reporting agencies all removed the charges, McClary left the statement on his report, "just in case."

Identity theft isn't the only credit crisis that a consumer statement may help clear up. A statement can say anything from "I'm currently disputing this charge with the lender" to "I fell behind on payments after I had a stroke." In the case of a genuine error on your credit report, the statement allows you to document the steps you took to correct the mistake, whether or not you were successful in the end.

Prepare to be ignored
Don't think, however, that these statements are magic bullets. Many experts believe that they're pointless, primarily because, in an age of automated underwriting, nobody reads them. "Your credit report is evaluated by computers," says Brette Sember, author of "The Complete Credit Repair Kit." "When you apply for a loan, there's not a guy sitting down reading your report and looking for a statement, saying, 'Oh, OK, she was sick and that explains it.' That's not happening anymore."

Even if someone does happen to glance at your consumer statement, it rarely has the desired effect, lenders admit. Timothy Palla of McDermott, Ohio, who spent 15 years working for consumer banks and in the finance office of a large car dealership, says, "Customer's comments on credit reports were far and few between, but to tell you the truth, I can't recall one single time when it made any difference in considering an application for credit."

Another option: Explain in person

Not all lenders will read the statement you slaved over -- but you're desperate to explain why your credit score is so low. There is one more option: Grab the loan officer and say it yourself. "Lenders -- at least seasoned ones -- can look into a person's eyes and listen with their mind and heart and discern whether or not the applicant is lying or telling the truth," says longtime Ohio lender Timothy Palla. "Often, the consumer's passion and determination have more weight than the problems on a credit report." The danger, of course, is coming off like a psycho. Palla offers these tips for keeping the conversation polite and effective:  Practice articulating the details surrounding the credit problems in three minutes or fewer. "The officer doesn't have all day, and they are not interested in hearing about the cat that got hit by a car," says Palla. Show you've made a good-faith effort to resolve problems and dispute errors. Come armed with documentation, in case the loan officer asks to see it. Don't take "no" personally. Instead, take it as a challenge to clean up your credit so that next time, they'll have to say "yes."

What's worse, adding a statement to your credit report can draw attention to problems or exacerbate them. When your statement says something like, "I was late on this account because ...", you're validating that the negative information in the report is accurate. Disputing an error may falsely indicate that everything else on your report is totally accurate. Also, while a statement about your medical history or the divorce that knocked you financially off kilter may explain your terrible credit score, it could also just underscore that you're a bad risk.

When it works
So what's the point of adding a consumer statement? For starters, you may simply feel better after having had your say. "It gives people a feeling of power," says Sember. "You feel like, 'At least I put my side of the story down.'" For someone frustrated by the effects of a negative financial history, that's no small comfort. 

Also, although many lenders rely on computers to determine your creditworthiness, some still do things the old-fashioned way. "With every lender I worked for, we were encouraged to look beyond the credit score," says McClary. "Not to say the score wasn't a large component, but there are things you can tell if you look at the details of the report with your own eyes that might be overlooked or missed with just a score."

Some experts even think that the current credit crisis may mark a return to more manual underwriting. "Given the current economic environment, the shift to automated approvals may be reversing itself," says TransUnion's Katz. "Banks are clearly scrutinizing every aspect of candidates' qualifications for a loan, so your paperwork may be more important than ever before."

At the very least, a consumer statement can make you look proactive about your credit situation in a way that appeals to potential lenders. It can even scare off debt collectors. "Filing a statement shows that the consumer is educated about their rights, and that's what debt collectors try to avoid," says Jonathan G. Stein, a consumer law attorney "They can't collect money as easily from people asserting their rights."

Brad Adams a Mortgage Broker specialist will get you the best and lowest mortgage rates for real estate and refinance in kelowna and all of B.C.
If an undeserved ding on your credit affects your credit score or your borrowing ability, a statement of explanation may serve you well. When in doubt, however, you may find that you say it best when you say nothing at all.

Tesimonials

"Great response times to questions - Love the options provided - You really understand what clients are going through and are up against - Thank you." D&J

"I just wanted to thank you so much for helping get my life back. You have no idea how amazing I feel to be able to have my credit back." SH

"We honestly can't thank you enough for your expertise and your amazing ability to get things done. We're so lucky to have you on our team. You really are a miracle worker. You've made us very happy!" A&E

"Being a first-time home buyer, I fully expected it to be confusing and daunting process. It turned out that finding a home was the difficult part as you made the mortgage process easy, simple and fun! Thanks again for the work and efforts of you and your team." KW

"Wanted to say thanks for all of your services!! I'm enjoying the new place. You made it stresss free and reliable, especially working a full time job." RR

"Just wanted to say thanks again for all your help.  You make it seem so easy to spend 220, 000 dollars!  We do appreciate it."
A & H

Brad Adams a Mortgage Broker specialist will get you the best and lowest mortgage rates for real estate and refinance in kelowna and all of B.C.

Don Cherry and Brad Adams Join up to bring you the Best Mortgages1!

Don Cherry has Joined DLC. So maybe you should come see what we can do.

Brad Adams a Mortgage Broker specialist will get you the best and lowest mortgage rates for real estate and refinance in kelowna and all of B.C.

As a mortgage broker in Kelowna Brad Adams can find you the lowest interest rates and best service 

Come see me at www.bradadams.ca

Why are Rates on the way up you might ask??

A common theme this week has been the near certainty of choppy and volatile movement in between the extremes of 2010 ranges.
The past few hours have indeed seen moderate losses in the bond market--losses of a sufficient magnitude to result in scattered reprices for the worse on rate sheets--but against a more strategic and longer term backdrop some good things are actually happening.  That's no guarantee they will continue to be good things by the end of the day, but for now, the market is pretty much beating us up as much as it possibly could without actually sending firm signals of further pain.
Most of what follows will be a combination of "bad news" mitigated by "yeah buts..."
Kicking things off with the 10yr note, there's that obvious bad news of the 13 tick loss on the day that sees yields currently 4bps higher at 2.923.  YEAH, BUT not only is that yield lower than the 2.963 seen on Monday, but even today's worst levels didn't violate that ceiling.  That will be evident in the chart that follows, but additionally, we'll also see a breakout of the trendline I laid out in my last post as being the trend that must be broken in order to get at least a sideways vibe established in the short term.  Not only do we have that breakout, but fans of cliche technical patterns will also see today and yesterday as a triangle breakout in a positive direction.
10yr chart moral of the story: yep, things got bad, but the reading on short term momentum shift is actually good for now.  It's important to keep in mind, based on AQ's comments re: positional resistance, that there is a clear chance we see 10s crest at 3.00% before rally momentum is able to gain traction.


Brad Adams a Mortgage Broker specialist will get you the best and lowest mortgage rates for real estate and refinance in kelowna and all of B.C.
MBS prices have broken out of a similar 2 day triangle, and additionally benefit from the technical reality that today's lows are higher than this week's previous lows (bring me a higher low?  whoah oh...?)  The fact that prices break upward relatively quickly after grinding relentlessly into the narrowest spaces at the end of the triangle adds a bit of validity to a technical reading of this breakout.


I
n 10yr futures, things aren't quite as straightforwardly positive as the other two sectors, but recalling our mention of the importance of 124-11 this morning, it's at least SOMETHING to consider that prices have just recently regained that mark.  Now the goal will be to maintain it by the time closing prices are marked in about an hour from now. But again...as AQ discussed earlier...the 124 put strike in 10yr futures is a target of short sellers. Touching that level before next Friday would be the best thing for bulls in the bond market at the moment...in terms of moving on with the cleansing process.



All this "ground-holding" amid a 20 pt bull-run in the S&P and one is left with the overwhelming sense that the bond market continues to do it's own thing, driven by technicals rather than supplementary market movements or data (see AQs link above).  After all, without the technical significance of previous lows this week, a 20 pt run up in the S&P and a 2250% improvement in philly fed would usually be enough to see something a bit worse than a 7 tick loss in production MBS or 4bp backup in the 10yr.
Stay tuned, the mighty Ben speaks tomorrow, and will be amplified by the absence of data.  Volatility remains a good bet.

If you want to get the most up to date Interest Rate information see a mortgage broker.  Brad Adams in Kelowna would be happy to help.

The Make up of a Credit Score

                                  CREDIT SCORING

The credit score, also referred to as a “FICO score” is a mathematical formulae created by Fair, Isaac and Company.

The credit score is used by most companies to decide if the applicant is a good credit risk or not. Equifax and Trans Union will calculate the numbers from the credit report and generate a number between 300 and 900.

A low score indicates a bad risk. A score of 700 or more puts the applicant in the lenders’ good books.

How scores are calculated:

Factor	Weight	Points
Payment History Bankruptcies, late payments past due accounts and wage attachments, collections, judgments	35%	315
Amounts Owed Amounts owed on accounts, proportion of balance to total credit limit	30%	270
Length of Credit History Time since accounts opened, time since account activity	15%	135
New Credit Number of recent credit inquiries, number of recently opened accounts	10%	90
Types of Credit Number of various types of accounts (credit cards, retail cards, mortgage)	10%	90
Potential Totals	100%	900

How Clients Can Improve Their Credit Score

·       Order a copy of the credit report, review it carefully and correct any significant errors.

·       Pay bills on time.

·       If there is a questionable credit history, they could open a few new accounts and use them responsibly, paying them off on time.

·       Avoid opening accounts without intention of using them. Having five or six of the same credit card type (e.g., Visa) is not favorable.

·       Having a credit card or installment loan can help boost a credit score, as long as the balance is not too high.

·       Keep the balance low in relation to available credit. If the credit limit is $10,000, keeping the balance below $2,500 (or 25 per cent of the limit) will improve the score. Balances of more than $7,500 (or 75% of the limit) will decrease the score. Going over the limit has an even more negative effect.

·       Pay off credit card debt instead of moving it around to lower rate cards. Moving balances to other credit cards (i.e., “balance transfer”) and closing an old account can hurt the score.

As 

As a Mortgage Broker in Kelowna Brad Adams can help you through the credit score process to get you the best scores

                                  

INCREASING YOUR CREDIT SCORE

Good credit translates into lower rates for the borrower!

·       HOT TIP! Do you have past due balances that have been neglected? If they are showing up on your credit report and you want to purchase a home, make sure you bring them up to current status whenever possible.

·       HOT TIP! Do you have outstanding debt that you can afford to pay off right now? Try to get these accounts down to a zero balance, or at least a lower balance. If your cash on hand doesn’t allow you to do this, try to distribute the debt amongst other open credit cards. You can also consider opening a new line of credit and transferring part of the balance off a card that is close to being “maxed out”. If you can get the resulting balances below 50% of the available credit, you’re on the road to improving your credit score considerably in most cases.

·       HOT TIP! Do not close existing credit card accounts; even if you don’t want to deal with the company anymore … Believe it or not, the credit history is a good thing to have!

·       HOT TIP! When married couples keep separate credit card accounts, some or all of the balances can be transferred to ones spouse’s list of accounts. This gives the other spouse an opportunity to increase their credit score and designate him or herself as the sole borrower on the mortgage loan. Ownership of the home can remain in both names!

·       HOT TIP! See if your credit provider will increase your available lines of credit. This can, in turn, reduce the overall debt ratio, but only do this if your credit card company can do that without a hard credit inquiry.

·       HOT TIP! Do you have past dues and charge offs within the last two years? Pay them off now, if you can! Past dues older than two years will have little to no impact on your credit score if they are paid, but can possibly bring the score down, which is something we don’t want to do… Focus on that two year time frame.

·       HOT TIP! Do you see errors in your report? Request the credit bureau delete any outstanding debt that is incorrectly charged to you, or things that should have been removed that you have already paid. They have an obligation to reconcile this within 30 days. If you see items on your report that are less than two years old and you have the money to pay it off now, mark the back of you payment check with the following notation: “Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record.” If necessary, you can use this cancelled check as proof of the transaction in the event the outstanding debt is not removed promptly and interferes with the closing of your loan.

Have an RRSP but don't have a down payment for your Home??

Are you ready to buy but are lacking a down payment? Have you been a renter for at least 5 years? Do you recall hearing something about the First Time Home Buyer’s Plan (HBP) through the Government of Canada? Rings a bell but can’t remember the details?

The HBP is a program that allows individuals who have not owned a home in the last 5 years to withdraw up to $25,000 from their RRSPs to buy or build a qualifying home. The home can be for you or for a related person with a disability. Why is this plan a benefit? Because you do not have to claim this withdrawal as income!! You have 15 years to pay back the withdrawal in minimum 1/15 increments or greater per year until the balance is zero with no income tax implications. 
Brad Adams a Mortgage Broker specialist will get you the best and lowest mortgage rates for real estate and refinance in kelowna and all of B.C.
But what if you don't have RRSPs to withdraw? You may be able to apply for an RRSP loan for $25,000 today. And as long as the funds remain in the RRSP for 90 days or longer, they can be withdrawn under the HBP plan. $25,000 as 5% of a purchase price is $500,000. So we are creating enough of a down payment for up to $500,000 purchase price. Add a spouse for another $25,000 and there is enough down payment for a $1,000,000 property. This should cover 99% of first time buyers. Essentially….you are borrowing your down payment! 
There are more benefits too! The $25,000 contribution still counts as an RRSP contribution for the year which means assuming there is enough room in your contribution limit, and you have paid the appropriate amount of income taxes for the year, this will equate to a hefty tax return that could either be applied to the RRSP loan, pay for any legal fees related to the house purchase, or consolidate high payment and high interest debt.


As a Mortgage Broker in Kelowna I can help meet your real estate needs.

There are some conditions that apply of course. Some RRSPs, such as locked-in or group RRSPs, do not allow you to withdraw funds from them so you must let your financial planner know what plans you have with the RRSP so they are invested into the correct RRSP product. The RRSP loan may change the debt service ratio of the mortgage application so when considering this option, ensure you are speaking with a qualified mortgage professional prior to applying for an RRSP loan as we can work out the entire scenario ahead of time to gauge what effect this will have on debt service ratios. I have access to accountants and financial planners that can put this program in place so if would like to see if this works for you, please call me for a full evaluation of your situation and suitability for this program.

Still the Lowest Mortgage Rates Around

Brad Adams White House Mortgages, DLC Phone: 250-868-2209 Email: adams.mortgage@shaw.ca http://www.bradadams.ca

Brad Adams a Mortgage Broker specialist will get you the best and lowest mortgage rates for real estate and refinance in kelowna and all of B.C.

This edition of the Weekly Rate Minder has the latest, best rates for Canadian mortgages. 
At Dominion Lending Centres, we work on your behalf to find the mortgage that suits 
your needs. Best of all — our service is "free".* It's the selected lender that pays us and YOUget the best rate. *(O.A.C., E.&O.E.)

• Our Best Rates
• Explore Mortgage Scenarios with Helpful Calculators on http://www.bradadams.ca
Brad Adams is a Mortgage Broker in Kelowna giving the Lowest Rates and the Best Service

Terms	Bank Rates	Our Rates
6 Month	4.45%	3.95%
1 YEAR	3.20%	2.44%
2 YEARS	3.45%	2.69%
3 YEARS	4.00%	2.90%
4 YEARS	4.94%	3.44%
5 YEARS	5.29%	3.39%
7 YEARS	6.09%	4.75%
10 YEARS	6.40%	5.15%
Rates are subject to change without notice. *OAC E&OE

Prime Rate is 3.00%

Variable rate mortgages from as low as Prime - .75%   Please note that rates shown above are subject to change without notice.  The rates shown are  posted rates and the actual rate you receive may be different,  depending upon your personal financial situation. “Some conditions may apply.  Rates may vary from Province to Province. Rates subject to change without notice.  *O.A.C. E.& O.E.” Check with your Dominion Lending Centres Mortgage Professional  for full details and to determine what rate will be available for you. *O.A.C., E.& O.E.

5 Scary Credit Card Situations -- and How to Deal With Them

Even if you're too old for the usual Halloween thrills and chills this year, there's still potential for plenty of spookiness ... lurking right inside your wallet.
(Cue the scary music).

It's your credit card. Chances are it has provided you with plenty of "treats" in the past, but you should beware of the "tricks," too. Here are some of the most frightening scenarios you might encounter with your credit card, along with the best tips for facing down those demons before they eternally haunt you.

Credit card nightmare No. 1: You lost your card (or someone stole it).

It happens to many of us -- you just can't locate your card after retracing all your steps. The ghost of your credit card is on the loose.

"The first thing you need to do is notify your card issuer," said Mike McCoy, president of Wells Fargo consumer credit cards. "To keep a scary situation from getting even scarier, the company can work with the consumer to make sure that a new card gets out to the consumer and that the old card is shut down."

Do this sooner rather than later to avoid further problems should your card fall into the wrong set of claws. And if you pay any bills with your credit card, be sure to give those creditors your new card's information, so you don't inadvertently miss a payment.

Credit card nightmare No. 2: You've become identity theft's latest victim.

It might not make for the most enticing horror film plot, but identity theft is a very real fright these days, affecting more than 9 million Americans every year.

What can you do if charges that you didn't make suddenly start to materialize on your credit card statement?

First, contact the bank that issued the card, says Richard Bialek of the Bialek Group, a corporate financial advisory firm. "Also check your statement to see if you can identify who the merchant is and when and for what amount the transaction was. Having it available when you call the bank helps speed up the process."

In order to protect yourself from identity theft, look into your credit card company's fraud protection services, which may include tools for alerting you when purchases are made in certain categories.

McCoy says it's also important to use common sense to ward off would-be identity thieves -- continually scrutinize your statements, shop with merchants you know, sign the back of your card, don't give out financial information over the phone and don't leave receipts lying around.

Credit card nightmare No. 3: You missed a payment.

Missing a credit card payment can potentially slash your credit score, grim reaper-style. And the longer you go without making a payment, the more damage it will do. Being 120 days late on a payment has the same negative effect as a repossession on your credit report.

Once again, experts unanimously says the best thing to do is to pick up the phone and call your credit card company.

"Typically, it is best to make sure that you make up your late payment within 60 days, because only after 60 days can your credit card company increase your interest rate because of your late payment," said Dani Zabala, who writes the blog GetBankSmart.

And if you can make the payment within 30 days, even better, because then it might not even show up on your credit report, he says.

Late fees are another nightmare. Most companies assess them automatically, "hence there is usually little you can do to pre-emptively stop them from happening before the fee is applied. But there are usually several steps you can take after the fee is charged," Zabala says.

Contacting your card issuer and asking for a refund of the fee is the best route. Zabala said the company typically looks at three things when deciding to reverse the fee: "One, the regularity of the occurrence; two, your total value to the credit card company; and three, the overall 'health' of your account."

Credit nightmare No. 4: Your credit card company hikes your interest rate.

Ushered in on a wave of changing credit card industry regulations, many consumers have been surprised by unwelcome changes to their credit card terms, such as increased interest rates or annual fees. Yikes.

The good news is many companies are willing to work with consumers to find a solution.

"I think it's always important in situations like this to contact the company and inquire as to the reasons that has occurred and what other alternatives there might be," McCoy said.

Consumers have 45 days following notification of a rate increase to respond to the credit card company, Zabala said. If the matter is not resolved to your satisfaction, you can choose to decline the company's offer and close your card. You won't be able to charge on the card anymore, but any remaining balances you have at closure will stay at the original rate. You may transfer the balance to another card if better offers are available to you.

Credit nightmare No. 5: You are denied credit.

Not having access to credit is a huge concern, since in order to build your credit standing, you have to have access to credit to begin with.

What to do if you've been denied?

"Contact the bank and ask for an explanation why, and confirm they have the correct information," said Bialek. "In addition, the applicant can request a copy of any credit report that was used to make the decision. It is a good idea to regularly check your credit bureau reports to ensure the information is correct."

The bank might also be able to offer you an alternative, such as a secured card, said McCoy, which might lead to access to credit in the future.

The bottom line is that in each of these scary scenarios, remember that your credit card company isn't the bogeyman. It's best to try to work out your problems directly with the issuer. Hiding in a spooky dark closet, tempting as it may be, is not an option.

__________________________________________________________________________________

By seeing a Mortgage Broker in Kelowna like Brad Adams you can get the best advice on avoiding this scare.

by Cynthia J. Drake on Yahoo.ca
Brad Adams a Mortgage Broker specialist will get you the best and lowest mortgage rates for real estate and refinance in kelowna and all of B.C.

A History or Lending Rates

This month, a client locked in a five-year mortgage at 3.49 per cent.

They could have done the same in 2001, but it would have been about 7 per cent.

In 1982 it would have been 18 per cent.

Even in the low-rate days of 1952, it would have been about 5.5 per cent.

Borrowing costs are lower than any time in modern history. This represents an incredible opportunity for those with the foresight (or fortitude) to take advantage.

Here are five strategies to consider:

1) When borrowing, lock in today’s rates. I know that at most times a variable rate is a better solution than fixed. Today is not "most times." If you are getting a new mortgage, lock it in. Even if it is only for three years, you can get a three-year mortgage today for under 3 per cent. The best three and five-year variable rates today are 2.25 per cent, but the Bank of Canada is almost certain to begin hiking rates again within six months. With such a narrow gap between a variable rate and a fixed rate, it simply isn’t worth the risk.

2) If you own a house, consolidate all your debts against your home. While credit card debt remains as high as 19 per cent in many cases, and other unsecured debts might be in the 5-per-cent to 7-per-cent range, you may have an opportunity to move those debts to your mortgage and gain significant savings. Even having a line of credit at prime + 1 per cent (4 per cent) can be consolidated into a mortgage for real savings. As an example, if your home is worth $500,000, and you have a mortgage balance of less than $400,000 (80 per cent), you will likely be able to consolidate other debts in your mortgage, up to 80 per cent of your home’s appraised value.

3) Start a business. As a business owner, I know that getting capital is not easy. The most common response I heard when I was looking many years ago was “use a line of credit secured by your house.” This might not be right for everyone, but I can assure you that you will not find a lower-cost source of capital (except those interest-free loans from family). In fact, I would look at using a fixed-rate mortgage as opposed to a line of credit if you require a larger amount of funds up front or want to secure the rate.

4) Borrow to invest. While some believe this is gambling, I can assure you that, unlike at the Las Vegas tables, the odds are tilted toward you. If you borrow to invest, the interest cost becomes tax deductible. In today’s market, you could do a five-year mortgage at 3.5 per cent, and if you are in the top tax bracket, this will effectively cost you less than 2 per cent a year. Over the past 60 years, the Toronto Stock Index has averaged annual returns of over 10 per cent. I am not saying you can count on these returns every year, but if your borrowing cost is under 2 per cent, and a dividend portfolio can pay 4 per cent a year just on the dividends, it can be a very powerful wealth-building strategy.

5) Borrow to buy more real estate. Imagine having an $800,000 house in Vancouver or Toronto and having no debt. You decide to buy a beautiful ocean-front property in Florida or California. The new property costs $300,000 – and they want cash. You can take out a mortgage on your Canadian property to possibly make the real estate purchase of a lifetime. If you are considering this, be sure to use a foreign-exchange dealer to save on exchange costs, and look into the tax issues of owning real estate in the United States.

Just for fun, you might want to file away this article and open it up in about five years. You may just wish you took the plunge when money was on sale.

By seeing a Mortgage Broker in Kelowna like Brad Adams you can get the best advice and learn more about these rates

Written by Ted Rechtshaffen Special to Globe and Mail