It PAYS to shop around.
Many Canadian homeowners pay too much for their homes because they are not getting the best mortgage financing available in the market.
THE STORY OF TWO BROTHERS
The Story of Two Brothers
This is a story of two brothers each of whom secures a mortgage to buy a $200,000 home. Each earns $70,000 a year and has $60,000 in savings.
The first brother, Brother A believes in the old way of paying off a mortgage, which is as soon as possible. Brother A bites the bullet and secures a 25 year mortgage at the 5 year fixed rate and shells out all $60,000 of his savings as a 30% down payment leaving him zero dollars to invest. This leaves him with a monthly payment of $698.00
Brother B, in contract, subscribes to the new way of mortgage planning, choosing instead to carry a big, long-term mortgage. He secures a 30 year mortgage at a 5 year variable rate and shells out only $40,000 of his savings as a 20% down payment leaving him $20,000 in an investment account (specifically a TFSA, earning annual interest of 8% tax free). This leaves him with a monthly payment of $639.00. Every month he adds the $60 difference to his investment account to earn additional income at 8%.
Results after 5 years
Brother A has a mortgage balance of $120,769.87
Has $0 in savings and investments
Brother B has a mortgage balance of $141,154.15
Has $33,154.15 in savings
Ahead by $13,110.97
The story becomes even more compelling over 15 years.
Brother A has a mortgage balance of $70,728.18
Has $0 in savings and investments
Brother B has a mortgage balance of $95,309
Has $87,039 in savings and investments
Ahead by $62,458
More importantly Brother B has less than a year left before his savings and investments exceeds his balance owing on his mortgage and therefore if he wished he could stop making mortgage payments and use his savings to payoff the mortgage. Additionally saving him $75,358 in mortgage payments.
Canadian home sales activity strengthens in July
Statistics released today by The Canadian Real Estate Association (CREA) show national home sales were up from June to July 2018.
National home sales rose 1.9% from June to July.
Actual (not seasonally adjusted) activity was down 1.3% from July 2017.
The number of newly listed homes edged down 1.2% from June to July.
The MLS Home Price Index (HPI) in July was up 2.1% year-over-year (y-o-y).
The national average sale price edged up 1% y-o-y.
National home sales via Canadian MLS Systems rose 1.9% in July 2018, building on increases in each of the two previous months but still running below levels recorded from mid-2013 to the end of last year. Led by the Greater Toronto Area (GTA), more than half of all local housing markets reported an increase sales activity from June to July.
Actual (not seasonally adjusted) activity was down 1.3% y-o-y. The result reflects fewer sales in major urban centres in British Columbia and an offsetting improvement in activity in the GTA.
This years new stress-test on mortgage applicants continues to weigh on home sales but its effect may be starting to fade slightly in Toronto and nearby markets, said CREA President Barb Sukkau. The degree to which the stress-test continues to sideline home buyers varies depending on location, housing type and price range. All real estate is local, and REALTORSremain your best source for information about sales and listings where you live or might like to in the future, said Sukkau.
Improving national home sales activity in recent months obscures significant differences in regional trends for home sales and prices, said Gregory Klump, CREAs Chief Economist. Regardless, rising interest rates and this years stress test on mortgage applicants will likely prove to be difficult hurdles to overcome for many would-be first time and move-up homebuyers, heading into the second half of the year and beyond.
Hacks to slash your car expenses
(NC) When you consider the rising costs of gas and insurance, owning a vehicle can get pricey. Fortunately, these easy tips can help lower how much you spend on your car so theres more room in your budget for other expenses, like groceries and recreation.
Increase your fuel economy. Did you know that a small spark plug problem can lead to a big expense? A dirty spark plug can cause a misfire, which wastes fuel and can ultimately harm your engine. To combat this, look for a spark plug thats designed for improved fuel economy, like the those from Fram. Try the Autolite Iridium XP Enhanced Alloy Technology line, which is precisely engineered with a focused ignition point for maximum power, efficiency and life.
Get regular tune-ups. When a vehicle is properly tuned, all systems work in harmony, including the fuel, ignition, emission and computer systems. While it can be a hassle getting to regular appointments at your mechanic or dealer, remember that you are investing in the long-term performance of your car, saving you time and money. Regular engine tune-ups bring power and efficiency back to your car, ensuring that its reliable, safe and road-ready.
Change your filters. There are many ways to keep your engine in good shape, helping it to last longer. One is checking the air filter every time you have the oil changed, because engine life and durability are directly related to keeping incoming air clean. Its an air filters job to remove contaminants from the air before it goes into the engine, and neglecting this component results in reduced performance. Fram extra guard filters provide premium engine protection and are proven to let in two times less dirt than the average leading standard retail brands.