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Money-saving tips for your mortgage z 2 z John Cavan, Mortgage Agent Mortgage ÎAskypur local au! mortgageplaner Most ofus feel that we have the right mortgage for aur situation, but we certainly don't want ta thjnk about the cost of that borrowing. The good news is that there are ways to save money over the life of your mortgage and during your mortgage years. Here are some fried-and-true money-saving mortgage strategies. hiaios your paymnen frequency. If you've been renting, you Iikely paid your housing costs once a month. But with a mortgage, you con also pay weekly (52 payments), bi-weekly <26 payments), or semi-monthly .(24 payments). Yau make additional payments with weekly and bi-weekly versus monthly or semi-monthly, which shortens your amartizatian periad and reduces the amaunt of interest you pay aver'the long run. Example: A $200, 000 mortpoge amortized for 25 yeors ai 4.5%. Ad1ust poyments [rom monthly ta every Pwo weeks (bi-weekly or 26 poymens), ond you'll reduce your amortizotion ta 21.7 years and sove $20, 033 in inferes. Shorton your amorflizalion. If you have the cash flow, you could shorten the number of years it will take for you ta pay off yaur mortgage. A shortened amartizatian means higher mortgage payments, but you wili pay less interest avertime. Exomple: $200, 000 mortgage omortized for 25 yeors af 4.5%. Switch ta 20 yeoos, and you'II poy off your mortgoge 5 yeors eorlier and sove $29,488 in interest. Some -homebuyers often use extended amortizatians as a safety net. They may choose a 30 year amortizatian for their mortgage, but they keep their payments at 20 or 25 years. This gives them the flexibility ta reduce their payments at any time should they need mare breathing room during a maternity leave, or in the event of a job ioss or illness. Use your pre-paynu,* pV îe1ges. Those prvileges are there far a reason- they hel yau pay off your martgage faster and reduce yaur interest casts. Pre-payment Iprivileges differ from lender ta lender. Take the 20+20 option. Once a year, you con increase your martgage payment by u p ta 20%. The second 20 lets you mak e a lump sum payment of up ta 20% each year. Exomple: $200,000 mortgage omortized for 25 yeors at 4. 5%. Put $2,000 lump sum amount eoch yeor on your mortgoge and you'll poy off your morîgoge in under 20 yeors ond sove $32,629 in interest costs. John Cavan is an Approved~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~t maximize your savinghtct.Mrtaequsinsadcocrs a b iece ojh avn ffc, oaeda 4 atn tMitn John con be reached by phone: 905-878-7213 or by email: john.cavan@mtgarc.ca. John Cavons svebsitc is www.stressfreemortgage.ca. Contact John today about your stressfree mort gage opportunities. Affordability tips for first time homebuyers Owning your first home is a milestone as well as an excitsng experience. However, many first urne homebuyers can he nervous about the process, as they don't know what ta expect or how ta, make the best decisions. RBC Royal Bank research shows that homebuyers between the ages of 18-34 wonry that buying their first home will mean living outside their means. "With the proper advice and hudgeuing tools you can stili live within your means and purchase your first home - you can do both," said Kavita Joshi, director, Client Strategies, RBC. "An RBC mortgage specialist can help you understand aIl the financial aspects of owning your first home, hy offering tailored advice and support." Joshi offers a number of uips ta help first rime homnehuyers stretch their dollars even further: Determine how much you can afford - hefore begimning your bouse search in earnest, review down payment options, household mncome, current debt, estimated monthly housing-related. costs and closing costs. Coeute your wish fist Determine what features in a bouse are need-to-have vs. nice-to-have. Estalish your dmmw paymient amoumt It's helpful ta establish an amaunt you are comfortahle with prior ta making your pur- chase. You'll be glad ta, know that there are options available depending on how much of a down payment you can afford. Factor i )ur doshsng cos It helps ta kmaw upfront what your clos- ing costs will be. When calculating closing costs, it's fairly afe ta assume you'll need at least an additional 1.5 per cent of the pur- chase price. Get pr-appmved for your mortgage If you are unsure you qualify for a mort- gage or how much you qualify for, speak with a mortgage specialist who can see if you can pre-qualify, so, you'll know what your mort- gage options will he. Underta,,d your paymteut optioans Many first-time homebuyers givc more thought ta, interest rates than the martgage solution itself. While rates certainly have ta he considered, the different types of mort- gages, variaus payment structures, terms and flexibility may have a much greater hearing on your overaîl costs of homeownership. Cosider unforeseen cqwpnses ahead of dîne WVhen you're huying a home for the first time, there are a number of related costs that you may not be familiar with, including: pro- fessional home inspection, lawyer fees, land transfer tax, property tax and property insur- ance. You also should take ino account "1one-time" costs, such as movrng expenses, and ongoing costs, such as heating, electrici- ty and water. Be realistic You may he under-or over-estimating how much you can afford. for a home. Online mortgage, calculators make it casier ta esti- mate accurately, hy providing you with infor- mation on the maximum mortgage payment amaunt you can affard each month (www.rbcroyalbank.comicgi-bin/mortgage/t ools/howmuch/afford.pl) Love your new home Once you've received the keys ta yaur new home, it will rime ta sit hack and enjoy every minute of heing a new hameowner. For further advice and tips, visit the RBC Advice Centre at www.rbcadvicecentre.com and jain the discussion on purchasing your first home on the RBC Facehook page at Facebook.com/rbcroyalbank. www.newscanada.com Rel i -idaedeb " ko your morgae. You con use the equity in your home ta consolidlate your other high interest debt such as credit cards ar store cards. By cansolidlating ail of your debt inta a new mortgage, yau con make fewer payments, save maney on interest costs, and improve your cash flow. In almost every case, yau're better off holding your debt in a martgage thon in any other lending vehicle. Why? Because Canadian homeowners are benefiting from mortgage rates that are amang the lowest in decades. Yau con then consider using the money you save eoch month ta pay off your martgage faster. Or use the savings for investing, RRSPs or RESPs. If yau are interested in explaring ways ta pay off yaur mar-tgage smanier, we con review your martgage and offer suggestions