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Should you put more money towards your mortgage payment this year?

Portable

Have some extra money and want to know whether you should put it toward your mortgage payments? Making prepayments on your mortgage could save you thousands of dollars over the years…just as long as your mortgage lender allows them. Here’s some information, courtesy of the Financial Consumer Agency of Canada, to help you make the best decision.

  • A mortgage prepayment is any amount you pay in addition to your regular payments. This can include increasing the amount of your regular mortgage payments or making a lump-sum payment to reduce or pay off your mortgage balance. The sooner you can make prepayments, the less interest you will pay over the long term. For example, consider a 25-year mortgage of $150,000 with a 5.45% interest rate. Assuming the interest rate remains the same over the life of the mortgage, the monthly payments would be about $911. Increasing the payments by $50 per month would pay off the mortgage two years sooner and save $14,000 in interest.

 

  • A one-time lump-sum payment of $15,000 in the second year of that same mortgage would result in paying off the mortgage more than four years earlier and saving over $33,000 in interest.

 

  • Check your mortgage agreement first, because not all mortgages have prepayment privileges. A closed mortgage may require you to pay a penalty or fee for any prepayment.

 

  • Federally regulated financial institutions, such as banks, must show your prepayment options in an information box at the beginning of your mortgage agreement. It will specify whether you can make prepayments, when you can do so, plus other related terms and conditions. Read your mortgage agreement carefully, and before signing ask the lender to explain anything that you don’t understand.

 

When shopping for a mortgage, ask the following questions:

How much can I prepay without penalty or fee?
Is there a minimum amount for a prepayment?
When can I make prepayments?
Are there any conditions or limitations?
If there are fees or penalties, how much are they, and how are they calculated?
Want to know more? The Financial Consumer Agency of Canada has more information on this topic at itpaystoknow.gc.ca

 

Jennifer Birch

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6 Things to do before you move

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Congratulations! You’ve purchased a new home and moving day is almost here! But before that day comes along, there are quite a few tasks still ahead of you that should be taken care of early to make the transition to your new home a smooth one. The less things to worry about, the better. Here are some reminders to add to your to-do list:

1. Forward your mail. It’s so easy to do online or in person at your local post office. It will also give you peace of mind knowing there won’t be any interrupted mail delivery. Go to the Canada Post website to get started at http://www.canadapost.ca.

2. Call your utility companies and let them know of the move. You’ll need to call your current utility companies to cancel or move your current services. There may be fees associated with this, especially if you’re not moving a service, but becoming a new account holder. Also, if you are cancelling services, ideally you should do this more than a month in advance of closing so you are not on the hook for another month’s services. Some companies even need an email with a written statement to cancel services, so keep the timing in mind.

3. Internet/phone/cable. Just like the utility companies, be aware of payment schedules and let them know of the move or any cancellations as early as possible.

4. Start moving things into storage and start packing as early as possible. This way you’re not rushing to get things out of the house and have time to declutter and pack properly. For those that have moved more than once, you know that by the end, you are just trying to move things as quickly as possible – packing whatever you can in boxes and bags – just to make the deadline. It can be very stressful if you leave it to the end. This way, you have time to label and package things properly.

5. Hire a cleaning service for your new home before you move in. One more thing you won’t have to do and you can focus on unpacking. You’ll love walking into a freshly cleaned new home!

6. If your new home needs updates or renovations (flooring, stairs, etc.), then have painters and contractors complete the work before you move in. Sometimes this isn’t possible but if it is, it will feel wonderful walking into a fresh new home. Of course, you’ll need alternate living arrangements if the renos are extensive, so that will need some planning as well. People have good intentions of doing a lot of these things themselves but get overwhelmed once they do move-in, so hiring professionals to do the job will help you focus on enjoying your new home.

Jennifer Birch

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5 New Year’s Resolutions for your home

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The start of a new year is a great time for resolutions. For this year’s resolution, why not make some promises to yourself about your home? Make a list of your top home priorities for 2016 and enjoy that feeling of satisfaction when they’re done. These five tips will help get you started!

1. It’s an excellent time to get a handle on your home insurance, review your policy and make sure it still fits your home’s needs. Contacting your insurance company may also reveal some savings too! Bundling home and auto insurance, for example, can often save money.

2. January is also a great time to review home safety. Replace the batteries and test your smoke and carbon monoxide detectors. Having one smoke detector per floor and at least one carbon monoxide detector is a requirement of most home insurance policies.

3. Another great goal is paying off your mortgage more quickly! Are you getting the best rate possible? Can you add an extra payment or increase your monthly payment to really make a dent in that principal? Contact your mortgage holder and have a conversation about how you can best meet your specific mortgage goals.

4. How about improving your home’s energy efficiency this year? Maybe it’s time to replace those old inefficient incandescent with some superefficient CFLs or LEDs. Most hardware stores carry an excellent selection. Also, add a power strip to electronics to defeat phantom load – the energy still being used even when devices are turned off.

5. And perhaps most satisfying is decluttering! Consider choosing one room a week, or even just one closet, to organize and declutter. Donate anything you haven’t used in a year (or never liked anyway!). You’ll be amazed at how much more space you have. Check out sites like Pinterest or Houzz to get you started with ideas!

Jennifer Birch