Paul Garrett

Those of us who desire to own a home often long for the time when our mortgage is paid off. Although the majority of Canadian mortgages are usually amortized over the course of 25 years, there are a few methods to expedite the repayment process you cna look at.

• Examine Your Payment Plan:
  Assessing your payment plan is a simple way to begin repaying your mortgage quicker, such as transferring to an accelerated bi-weekly payment plan. Even though this will equate to slightly more considerable monthly payments, the overall result is roughly one additional payment on your mortgage per year. This can reduce the total amortization time by a number of years, which is an efficient way to bring down your amortization faster.
• Pay More Towards Your Mortgage:
  This is a simple modification that can be done right away to start having a greater effect on your mortgage. Most lenders provide a prepayment privilege that permits you to augment your payment amount without incurring a penalty. This payment increase allowance can range anywhere from 10 to 20 percent of the original payment amount. If you got a salary raise or acquired some money, ponder placing those funds into your mortgage to help diminish your mortgage balance without feeling the need to alter your spending habits.
• Utilize Extra Funds:
  If you have the pre-payment option on your mortgage, that can be a great way to help reduce the balance faster. You can put in a single annual payment of 15-20% of the original loan amount. Additionally, some mortgages might permit you to raise your payment by the same percentage. It is a great way to use any extra money you might have received, such as a bonus from work or an inheritance.
• Negotiating for a Better Rate:
  Depending on the terms of your mortgage, you may want to look into lowering your payments and interest rate. This can be done when your mortgage comes up for renewal, when rates are starting to go down. You can either stay with your current lender and adjust the mortgage or transfer to a different lender with a lower rate (also called a switch and transfer).
• Opt for a Shorter Amortization Period:
  If you are due for a mortgage renewal, this is the perfect chance to look into a shorter amortization period. Although this will end up with higher monthly payments, in the long run, you will be paying less interest. Think about what you can afford and how fast you want to be free of the mortgage to be able to determine the most suitable amortization plan.

*It is possible that certain mortgage products come with these options, however, it is best to double check with your mortgage package or myself to make sure these options are available and to prevent any possible penalties.

Want to pay off your mortgage sooner? Contact me today and we can help take a look at your situationand evaluate the above solutions and selecting the most advantageous path of action for your circumstances.

Ready to ditch your mortgage debt and live mortgage-free? Check out our "how to guide" on paying off your mortgage faster. We'll show you the financial ninja moves you need to reduce your debt and save money on interest charges. It's like a financial game of whack-a-mole - knock down that debt with every payment. So put on your financial black belt and let's get started!

Increase your Payments Each Month

Paying off a mortgage can feel like an endless marathon, but increasing your mortgage payments is like crossing the finish line in record time. By putting a little extra towards your mortgage each month, you'll shave years off your mortgage term and save yourself thousands in interest. Think of it as a HIIT workout for your finances, giving your budget a healthy boost and strengthening your financial goals. So, lace up those budgeting shoes, grab a sweat towel, and get ready to sprint towards that mortgage-free finish line.

Make Bi-Weekly Payments

It's time to break up with your monthly mortgage payment and start seeing it twice a month. Making bi-weekly payments may sound like a complicated math problem, but it's actually an easy way to pay off your mortgage faster. By splitting your monthly payment into two smaller payments, you'll end up making an extra full payment each year. It's like finding money in your couch cushions, except it's your own money that you're using to pay off your mortgage sooner. So, say goodbye to the monotony of monthly payments and hello to bi-weekly payments, the financial equivalent of a spicy latte to start your day off right.

Round Up your Payments

Ready to make your mortgage payments a round number? Say goodbye to odd cents and hello to a smoother mortgage experience by rounding up your payments to the nearest hundred or thousand. It's a simple trick that can make a big difference in the long run. By adding a little extra to each payment, you'll end up paying off your mortgage faster and saving money on interest. It's like ordering a large pizza instead of a medium - you get more bang for your buck and everyone's happy.

Make a Larger Down Payment

If you're ready to take the plunge into homeownership, consider taking a flying leap with a larger down payment. By increasing your down payment, you'll not only lower your monthly mortgage payments, but you'll also save money on interest in the long run. It's like buying a Costco jumbo-sized bag of chips instead of a single serving - you get more value for your investment. Plus, a larger down payment can give you more equity in your home and potentially make it easier to refinance later on.

Use your Tax Refund for Mortgage Payments

Got a tax refund burning a hole in your pocket? Instead of splurging on a new gadget or a tropical vacation, consider using it to pay down your mortgage. It's like getting a bonus paycheck from Uncle Sam and investing it in your future financial freedom. By putting your tax refund towards your mortgage, you'll reduce your principal balance and save money on interest in the long run. It's like getting a free upgrade to first class - you get more benefits without paying extra.

Shorten the Amortization Period

Ready for a shorter ride to mortgage freedom? Consider refinancing your mortgage to a shorter term, like a 15 or 20-year loan. By doing so, you'll save money on interest in the long run and pay off your mortgage faster. It's like upgrading from a compact car to a sports car - you get more speed and efficiency for your investment. Plus, refinancing to a shorter term can also lower your interest rate, which means more savings in your pocket.

Cut Out Unnecessary Expenses

Ready to trim the fat off your mortgage payments? Start by cutting out unnecessary expenses, like that daily latte or the monthly streaming service you hardly use. It's like decluttering your financial closet - you'll free up more room in your budget and save money in the process. By redirecting those extra funds towards your mortgage payments, you'll reduce your principal balance and pay off your mortgage faster. It's like hitting the financial reset button and giving yourself a fresh start. Grab those scissors and start cutting out unnecessary expenses, because a little snip here and there can add up to big savings.

Avoid Refinancing Too Often

Refinancing your mortgage can be tempting, like trying out a new hairstyle every week. But just like haircuts, refinancing too often can be costly and damaging in the long run. Each time you refinance, you'll incur fees and potentially reset the clock on your mortgage term. It's like constantly dyeing your hair - you'll end up with a tangled mess and regret. So, before you make a rash decision, consider the long-term benefits and costs of refinancing.

Make Extra Payments During Low-Interest Periods

Looking for the perfect time to make extra mortgage payments? Wait for low-interest rate periods to hit. It's like waiting for the perfect wave to catch - timing is everything. When interest rates are low, more of your payment goes towards the principal balance, allowing you to pay off your mortgage faster. It's like surfing the financial waves - you'll ride the momentum towards financial freedom. Keep an eye on interest rate trends and seize the opportunity to make extra payments when rates are at their lowest. It's like catching the perfect wave - you'll feel the rush of excitement as you ride towards a debt-free future.

Set Up Automatic Payments

Don't have time to manually make your mortgage payments each month? No problem - automatic payment systems have got you covered. It's like having a personal assistant for your finances - you set it and forget it. By automating your mortgage payments, you'll never miss a due date and potentially avoid late fees. It's like having a virtual butler - your financial chores are taken care of.

Pay Down the Principal Balance

Want to be a principal player in your mortgage game? Pay down your principal balance. It's like being the MVP of your financial team - you'll be making the big plays. By paying more towards your principal balance, you'll reduce the amount of interest you'll pay over the life of your mortgage. It's like a financial hack - you'll be saving money without even trying. Plus, paying down your principal balance can help you build equity in your home faster. It's like hitting a financial home run - you'll be rounding the bases towards a debt-free future.

Make a Lump Sum Payment

Looking for a way to give your mortgage debt a one-two punch? Make a lump sum payment - it's like a knockout blow to your balance. By putting a large sum of money towards your mortgage, you'll reduce your overall debt and save money on interest charges. It's like giving your mortgage a financial karate chop - you'll be breaking through that debt in no time. But remember, a lump sum payment means parting with a chunk of cash.

Conclusion

Paying off your mortgage faster can be a daunting task, but with the right tools and strategies, it's possible to reduce your debt and save money on interest charges. Whether it's making extra payments, refinancing to a shorter term, or cutting out unnecessary expenses, there are many ways to accelerate your mortgage payments and achieve financial freedom. By taking small steps and staying focused on your goal, you can become mortgage-free sooner than you think. Don't wait - start acting today and make your dream of a mortgage-free life a reality.

Summertime brings sunny days, warm weather, and an ideal opportunity for house hunting. If you're considering buying a new home, the summer months offer several advantages worth considering. In this blog post, we'll explore the benefits of purchasing a new home during this season.

Larger Inventory:

Summer is traditionally the peak real estate season, meaning there's a larger inventory of homes on the market. This abundance of options provides buyers with a wide range of choices, increasing the likelihood of finding the perfect home that meets their needs and preferences.

Increased Competition:

While more houses are available during the summer, there's also a higher number of buyers in the market. Although this may seem like a disadvantage, it can actually work in your favor. Increased competition can motivate sellers to negotiate prices and terms more favorably, giving you an opportunity to secure a better deal.

Easier Moving Process:

Moving can be stressful, especially if you have a family or children. The summer months offer more flexibility in terms of scheduling and planning the move. Longer daylight hours and favorable weather conditions make the process more convenient and allow for smoother transitions.

Accessibility to School District Information:

For families with school-age children, purchasing a new home in the summer provides ample time to research and evaluate school districts. With the academic year ahead, you'll have the opportunity to visit schools, meet with administrators, and make informed decisions about the best educational options for your family.

Seasonal Home Features:

Summer allows you to fully assess the outdoor features of a potential new home. From the landscaping and gardens to the swimming pool or outdoor entertaining areas, you can evaluate how these elements enhance your lifestyle during the warmer months. Buying a new home in summer allows you to experience these features firsthand and envision how you would utilize them.

Home Maintenance and Repairs:

Buying a home in summer can reduce the immediate need for repairs and maintenance. Winter weather conditions can sometimes hide certain issues, making it difficult to assess the true condition of a property. By purchasing in the summer, you have a better chance of identifying potential problems and addressing them before they become more significant concerns.

Purchasing a new home in the summer offers numerous benefits. With a larger inventory, increased negotiating power, favorable moving conditions, and the ability to assess seasonal features, summer is an excellent time to embark on the home-buying journey. Take advantage of the opportunities this season presents, and make your dream of owning a new home a reality.

Ah, housing affordability - the elusive unicorn of the real estate world. It's the topic that's always on everyone's lips, but when it comes to actually finding it, it's as if we're all searching for a mythical creature that doesn't actually exist. We hear stories of people who have managed to catch a glimpse of this elusive beast - maybe they inherited a home from their grandparents, or they found a hidden gem in a less-popular neighbourhood. But for most of us, housing affordability remains a dream that's just out of reach.

What’s Going On?

According to a report by the National Bank of Canada, the Housing Affordability Index was at its lowest level since 1990 in late 2020. This means that people are having to spend more of their income on things like mortgage payments, property taxes, and utilities just to keep a roof over their heads.

A big part of the problem is that there are more people looking for houses than there are houses available. Low-interest rates have made it easier for people to borrow money to buy homes, but this has also driven up demand, and the supply of available homes hasn't been able to keep up. On top of that, the cost of renting is also going up faster than people's wages. A recent study found that in 2020, the average rent for a one-bedroom apartment in Canada went up by 5.5%, while the average wage for low-income workers only went up by 0.5%.

Home prices have been climbing at an eye-watering rate, with the average price of a home in Canada soaring by 25% between 2015 and 2020. According to a recent report by RBC, the average price of a home is now a whopping 7.2 times the average household income! In fact, the average household spends a mind-boggling 45% of their income just to keep a roof over their heads! That's like saying goodbye to almost half of your paycheck every month, just to pay rent or mortgage, property taxes, and utilities. These are just a few examples of how housing affordability is becoming a real issue in Canada.

United Nations

Canada's housing crisis has recently caught the attention of the United Nations, and it's not hard to see why. With skyrocketing housing prices and an increasing number of people facing homelessness, it's clear that this is a problem that needs urgent attention. In fact, the UN Special Rapporteur on Adequate Housing, Leilani Farha, has criticized Canada's housing policies, stating that they fail to protect the most vulnerable members of society. She has called for the Canadian government to take action to ensure that everyone has access to safe and affordable housing.

What is the Government Doing?

The National Housing Strategy (NHS) is a comprehensive plan launched by the Canadian government in 2017 to address the housing affordability crisis in Canada. The strategy aims to help vulnerable populations, reduce chronic homelessness, and improve the availability and quality of affordable housing across the country. The NHS includes several key initiatives, such as:

• The Canada Housing Benefit: a portable benefit that provides direct financial assistance to low-income households.
• The National Housing Co-Investment Fund: a $13.2 billion fund that provides low-cost loans and contributions to support the construction, repair, and renewal of affordable housing.
• The Federal Community Housing Initiative: a $4 billion program that supports the repair and renewal of existing social housing and helps non-profit housing providers preserve their affordable housing stock.
• The Rapid Housing Initiative: a $1 billion program launched in 2020 to rapidly create new affordable housing units for vulnerable populations.

Overall, the National Housing Strategy represents a significant commitment by the Canadian government to address the housing affordability crisis and improve the availability and quality of affordable housing for all Canadians.

First-Time Home Buyer Incentive

The First-Time Home Buyer Incentive is a program offered by the Canadian government to help first-time home buyers purchase a home. This program was introduced in 2019 as a part of the government's efforts to make home ownership more affordable for Canadians.

The incentive works by providing eligible home buyers with a shared equity mortgage. This means that the government will provide up to 10% of the purchase price of a new home, or 5% for an existing home, in the form of a loan. This loan is interest-free and does not require ongoing payments but must be repaid when the home is sold or within 25 years. By reducing the amount of money that a first-time home buyer needs to borrow, this program can help make monthly mortgage payments more affordable. It also allows buyers to put down a smaller down payment and reduces the amount of mortgage insurance they need to pay.

To be eligible for the First-Time Home Buyer Incentive, a buyer must have a household income of less than $120,000 per year and must be a first-time home buyer (or have not owned a home in the last four years). The property being purchased must also be the buyer's primary residence.

Conclusion

Affordable housing, the game of whack-a-mole that we all wish we could win. Just when you think you've finally found that perfect, budget-friendly apartment or starter home, it disappears like a pesky mole that's just out of reach. It's enough to make you want to throw down the mallet and give up altogether. But don't despair, my friends! With the help of a savvy real estate agent or mortgage broker, you might just be able to whack that elusive affordable housing mole once and for all. So, keep swinging, and let's hope we can all come out on top!

As a first-time home buyer, budgeting is an essential part of the home buying process. By carefully planning your finances and considering all of the costs associated with purchasing a home, you can ensure that you are prepared to make a smart, informed decision.

One of the first things you need to consider when budgeting for a home is your down payment. This is the upfront payment that you will make towards the purchase of your home, and it typically ranges from 5% to 20% of the home's purchase price. In addition to your down payment, you will also need to budget for closing costs, which can include fees for things like legal services, inspections, and lender charges.

Another important factor to consider when budgeting for a home is your monthly mortgage payment. This will include both the principal (the amount you borrowed) and the interest (the cost of borrowing the money), as well as any property taxes and insurance. To get a rough estimate of your monthly mortgage payment, you can use an online mortgage calculator to input your loan amount, interest rate, and loan term.

In addition to your mortgage payment, you will also need to budget for other ongoing expenses associated with owning a home. These can include things like utilities, maintenance and repairs, and homeowners association fees (if applicable). It's important to carefully consider these costs and factor them into your budget to ensure that you can afford the monthly expenses of homeownership.

Finally, it's important to remember that your budget is a guideline, not a hard and fast rule. You may need to adjust your budget as you go through the home buying process, and it's important to be flexible and prepared for unexpected expenses. By carefully planning and budgeting for your first home, you can set yourself up for success and make the home buying process a smoother and more enjoyable experience.

Bank of Canada maintains policy rate, continues quantitative tightening

The Bank of Canada today held its target for the overnight rate at 4.5%, with the Bank Rate at 4.75% and the deposit rate at 4.5%. The Bank is also continuing its policy of quantitative tightening.

Inflation in many countries is easing in the face of lower energy prices, normalizing global supply chains, and tighter monetary policy. At the same time, labour markets remain tight and measures of core inflation in many advanced economies suggest persistent price pressures, especially for services.

Global economic growth has been stronger than anticipated. Growth in the United States and Europe has surprised on the upside, but is expected to weaken as tighter monetary policy continues to feed through those economies. In the United States, recent stress in the banking sector has tightened credit conditions further. US growth is expected to slow considerably in the coming months, with particular weakness in sectors that are important for Canadian exports. Meanwhile, activity in China's economy has rebounded, particularly in services. Overall, commodity prices are close to their January levels. The Bank's April Monetary Policy Report (MPR) projects global growth of 2.6% this year, 2.1% in 2024, and 2.8% in 2025.

In Canada, demand is still exceeding supply and the labour market remains tight. Economic growth in the first quarter looks to be stronger than was projected in January, with a bounce in exports and solid consumption growth. While the Bank's Business Outlook Survey suggests acute labour shortages are starting to ease, wage growth is still elevated relative to productivity growth. Strong population gains are adding to labour supply and supporting employment growth while also boosting aggregate consumption. Housing market activity remains subdued.

As more households renew their mortgages at higher rates and restrictive monetary policy works its way through the economy more broadly, consumption is expected to moderate this year. Softening foreign demand is expected to restrain exports and business investment. Overall, GDP growth is projected to be weak through the remainder of this year before strengthening gradually next year. This implies the economy will move into excess supply in the second half of this year. The Bank now projects Canada's economy to grow by 1.4% this year and 1.3% in 2024 before picking up to 2.5% in 2025.

CPI inflation eased to 5.2% in February, and the Bank's preferred measures of core inflation were just under 5%. The Bank expects CPI inflation to fall quickly to around 3% in the middle of this year and then decline more gradually to the 2% target by the end of 2024. Recent data is reinforcing Governing Council's confidence that inflation will continue to decline in the next few months. However, getting inflation the rest of the way back to 2% could prove to be more difficult because inflation expectations are coming down slowly, service price inflation and wage growth remain elevated, and corporate pricing behaviour has yet to normalize. As it sets monetary policy, Governing Council will be particularly focused on these indicators, and the evolution of core inflation, to gauge the progress of CPI inflation back to target.

In light of its outlook for growth and inflation, Governing Council decided to maintain the policy rate at 4.5%. Quantitative tightening continues to complement this restrictive stance. Governing Council continues to assess whether monetary policy is sufficiently restrictive to relieve price pressures and remains prepared to raise the policy rate further if needed to return inflation to the 2% target. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is June 7, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on July 12, 2023.

Report as of the Bank of Canada website