Review Your Mortgage Once a Year
Most of us tend to think of our mortgage as the ultimate "buy and hold" purchase. After all, who wants to spend any more time in the "borrower" chair than is absolutely necessary? You get a 5-year term, and then go on automatic pilot until it comes due again. You might wring your hands over your other finances, but your mortgage is set in stone, right?
Well, not exactly. In fact, it's a great idea to have an annual mortgage review to see if it's really working for you-especially in the context of the rest of your financial picture. A lot can happen in a year, particularly during our "mortgage years" when we tend to juggle busy lives with many financial commitments: care of our children, tuition or school expenses, one or more cars, vacations, home renovations, travel... the list goes on and on.
Life doesn't stand still. Chances are something in your financial life has changed since you took out a mortgage. Our Mortgage Brokers understand why your mortgage may need some tweaking:
- You're considering a move to a new home in the next year or two;
- You want tap into your home equity for a renovation project;
- You're wondering if you can afford a vacation property;
- You're weighing the benefits of an investment property;
- You're concerned about major upcoming expenses, such as university tuition a wedding, a leave from work, a new career or business, a big vacation or a new vehicle;
- You're making more or less money than you were when you began your mortgage;
- You're carrying credit card or other high- interest debt that is hurting your monthly cash flow;
- You're worried that you're not saving enough for your retirement years, and you've heard there's a way to convert your non-deductible mortgage debt into deductible investment loans using a re-advanceable mortgage.
- You're interested in collecting annual tax refunds, paying off your mortgage faster, and having an investment portfolio for the future.
If any of these sound familiar-and you're held your mortgage for a year or more-it's time to review your mortgage and make sure it's meeting your ongoing needs.
At Mortgage Architects, our Mortgage Brokers provide this service free of charge and with no obligation. They tailor each mortgage to their client's current needs and long-term goals, with an overall focus on mortgage planning. Mortgage Brokers believe that a mortgage is not just a single transaction done in isolation of your goals and overall financial situation, but that a mortgage can accomplish so much more when properly structured and integrated into your overall financial plan.
Mortgage Brokers look at the mortgage as a financial keystone - the right mortgage can build your wealth, protect you from a financial downturn, and save you thousands of dollars. That's why an annual mortgage review is part of our overall service offering. For you, it's also a smart financial move and our Mortgage Brokers can help.
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Build Wealth with a Re-advanceable Mortgage
American homebuyers enjoy a nice little tax advantage because they can directly deduct the interest paid on home buying debt. Unfortunately, tax rules here in Canada don't allow for it. However, there is a little-known investment-friendly tax policy that savvy Canadian homeowners can take advantage of. With the right professional guidance, thousands of Canadian homebuyers are using a conversion strategy to get a tax-deductible mortgage.
That's right: you can write off the interest you pay on your mortgage, and you can do it perfectly legally, right here in Canada.
The strategy takes advantage of tax breaks designed to encourage non-registered investing. If you borrow money to invest, the interest on that debt can be tax-deductible. If, for example, you borrowed against your home equity-for the purpose of investing to make money-the interest on that loan would be tax- deductible. There are many types of qualifying investments: For instance, you could purchase a rental property or a bunch of blue-chip stocks or even mutual funds. Your goal then is to convert your non-deductible mortgage debt into a tax-deductible investment loan.
What makes this strategy such a great fit for many Canadians is that people in their homebuying years are always trying to balance paying off the house and investing for the future. By using a re- advanceable mortgage that includes a line of credit (LOC), you can do both.
Here's how it works. You convert your existing mortgage to a re-advanceable mortgage/line of credit combination, which will allow you to automatically take advantage of any increasing equity in your home. As you create equity in your mortgage account by paying down your mortgage, your line of credit is automatically increased by the same amount. As the non-tax-deductible mortgage is paid off on one side, it is then re-advanced to the wealth-building investment LOC, or the tax-deductible side of the ledger if those funds are used for investments. The tax refunds you generate can be used to accelerate mortgage paydown and increase the LOC portion for further investments.
For years now, Canadian homeowners, after having built up some equity in their homes, have taken out lines of credit against that equity and used the money for renovations, debt consolidation or investments. However, those lines of credit are usually separate from the mortgage and have set limits - they don't automatically increase as equity builds unless the homeowner applies for an increase. The re-advanceable/line of credit combination offers more convenience and flexibility compared to the more traditional approach.
Mortgage Brokers at Mortgage Architects have access to more than 50 lenders and many offer competitive re-advanceable mortgages. Features include:
- Sub accounts so you can borrow for different purposes and keep track of the interest expenses (important when tracking interest for tax purposes);
- Automatic deposits so you can use your paycheque or other deposits to temporarily offset your debt while those deposits aren't in use (this will save you interest);
- Flexibility to split the mortgage into sections with different rates, terms and amortizations, pay interest only, or even skip a payment.
During your mortgage years, a re-advanceable mortgage may be the perfect tool to help you balance your financial goals of paying down debt and accumulating wealth. Our Mortgage Brokers can help find a re-advanceable mortgage to meet your needs.
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