Leveraging LOC

March 20, 2008

Save $$$ – Using LOC

Line of credit (LOC) can be used to help home owners pay off their home mortgage sooner and save them thousands dollars on mortgage interest payment. A $200,000 mortgage loan amortized over 25 years can be shortened to just over 13 years 2 months, and the interest savings can be as much as $60,000!

Who can benefit?

Not all home owners can make use of the above program to pay off their home mortgage sooner. For home owners who have substantial equity built up or those who can make use of their LOC may consider using the program. A home owner who wishes to take advantage of the savings should have a good understanding on the risks involved as interest rates do fluctuate over the duration of the program.

The program can best be illustrated using the following assumptions:

1) That a home owner’s mortgage is around $200,000 and he or she is eligible to be approved an additional $100,000 “Line of Credit”

2) That the interest rate on the $200,000 mortgage is at 5.5% and the $100,000 LOC is at Prime Rate assumed to be at 5.5% paying interest only each month.

3) The $100,000 is invested in a 12% a year interest paying investment (Mortgage Investment Corporation or private 2nd mortgages) with monthly interest income of $1,000. This money generated from the investment less monthly interest cost of $541.67 is used to pay down the principal.

4) The $200,000 mortgage is paid off in 13 years and 2 months. The total interest paid on the $200,000 mortgage works out to around $76,542 for a total interest savings of $60,050.

If you like to have more information whether the above program is for you, you can contact kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Second Mortgages

March 20, 2008

What are second mortgages?

Second mortgages are loan contracts secured on real properties which already have prior first mortgage charges on them. Most second mortgages are private mortgage loans provided by private mortgage lenders. These private mortgage loans fill the gaps that some financial institution such as banks and credit unions are unable or unwilling to fulfill.

Private Mortgage Lenders

Second mortgages are secured high yield investments private investors understand, and at the same time have some control on the investments. A private mortgage is a relatively safe investment. Most private lenders capped their investment risks to not more than 85% of the real estates provided as securities. The interest rates payable on 2nd mortgage loan contracts are from 9% to 18% per annum.

Some common features of a 2nd mortgage are:

1). Financing up to 80%/90% of house value.
2). Interest rates from 9% to 18%.
3). Term – generally from 1 to 3 years.
4). Payments – mostly interest payment only.
5). Lender/broker fees – varies from 4% to 8%
6). Lending area – Vancouver and Fraser Valley.
7). Approval time – may take 1 day to 5 days.
8). Loan funding – can be done in less then 10 days.

Hard Money Financing

The use of hard money financing is a last resort and urgent financing that helps to save the a borrower’s home from being foreclosed. Not many home owners are aware of this type of financing to avoid foreclosure. The cost of losing a home due to foreclosure is much higher than the cost of getting “hard money financing”. We have private lenders who may provide the financing to save a home from foreclosure.

If you like to have more information on private mortgages or hard money financing, call me now at 604-721-4817 for a discussion.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Accelerated Payment

March 17, 2008

There are a few simple tips on mortgage savings that can shave off thousands of dollars in mortgage interest payment from your mortgage.

Your bank loves you and would like you to drag out your mortgage payment over a longer period. The longer you take to pay off your mortgage loan, the more interest you’ll end up paying.

The following illustration is based on $300,000 mortgage, amortized over 25 years at 3.59% per annum interest rate compounded semi-annually.

By the time you finish paying your mortgage in 25 years at the minimum of $1,5120.10 monthly payment, you would have paid $453,629.00 for your original a loan of $300,000. The interest amount is a staggering $153,639.00!

Here are some tips on saving money on your home mortgage:

Tip#1
Shop for the best mortgage rate
At 3.59% you pay $1,5120.1 monthly instead of $1,528.05 at 3.69%. Your interest paid on the higher rate is $161,012. You save $4,777.
Tip #2
make use of accelerated bi-weekly payment.
You pay $756.05 every 2 weeks. Mortgage paid off in 22 years 1 month. Your interest paid is $133,098 for a saving of $20,541!
Tip #3
Make yearly $2000 lump sum payment.
Maintain bi-weekly accelerated payment. Mortgage paid off in 17 years 1 month. Your interest paid is $112,758 for a saving of $40.881!
Tip #4
Increase bi-weekly payment by $100 to $660.39.
Together with $2,000 yearly lump-sum payment, your mortgage is paid off in 10 years and 8 months. Your interest paid is $69,416 for a saving of $96,820!

You can see from the above illustration, a slightly better interest rate will only save you a few thousand dollars. You can save more on mortgage interest payment if you follow some of the tips above. With a smart mortgage repayment plan, you may pay off your mortgage in 1/2 the time on the time of your 30 or 35 years mortgage.

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Canadian Real Estate Future

March 7, 2008

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After 5 years of surge in housing demand and price gains, experts are projecting a more moderate housing market for 2008. Housing affordability is likely to improve this year as house-price growth eases and falling interest rates make mortgages cheaper, economists say. Read the full report here…

Kindly contact me (Elsie Tse) at 604-716-3369 or Email Me 

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Buy Or Sell First?

March 7, 2008

newtownhouse2.jpg Buy or sell first when you are planning to make a move?

If you wish to move from your present home, you need to free up your equity as down payment for the home you wish to purchase. This may be a complicated process depending on your financial status. Read more

Property Transfer Tax

March 4, 2008

condo280.jpgPROPERTY TRANSFER TAX AND FIRST TIME HOME BUYER’S INFORMATION

The Property Transfer Tax is a tax payable to the Provincial Government by purchasers of real estate. The tax applies to all types of real estate, whether residential, commercial or industrial. Read more

Buying With 5% Down Payment

March 2, 2008

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Buying a home with 5% down payment. This is the minimum requirement for a home buyer to qualify for a high ratio mortgage. A home buyer is also required to show he or she has her own savings to cover closing costs of at least 1.5% of the purchase price. Read more