As life changes, a regular once-over helps keep finances in shape

For many Canadians, financial matters are about as enjoyable as their yearly physical exam. But the current low-rate environment may make it a good time for homeowners to become proactive about their overall financial health by taking a close look at one of their most important obligations – their mortgage.

“A mortgage isn’t something you sign once every few years and then forget about,” notes Elfie Hayes, mortgage professional with Mortgage Intelligence in Durham Region. “Life can change substantially in a year, and a regular review can help ensure that your mortgage is still the right fit for your financial situation.”

According to Elfie, a number of major life changes may call for looking over your mortgage, such as starting or growing a family, starting a business, loss or interruption of income, home renovations, purchasing investment property or other major expenditures. A mortgage professional can assess a homeowner’s current interest rate, payments and other mortgage terms, determine available home equity, and recommend options that may help them better reach their goals.

Elfie offers some common reasons to revisit your mortgage:

1. 1. Paying down your mortgage faster: If you receive extra cash like an inheritance, tax refund or a bonus at work, think about putting it toward your mortgage. For example, paying an extra $3,000 once every year toward the principal on a $250,000 mortgage can result in interest savings of $42,442 over the life of the mortgage, assuming a 25-year amortization and a fixed rate of 4.19%.

1. 2. Lowering monthly payments: Renegotiating for a lower interest rate can protect your finances from unforeseen factors like a reduced income, and allow you to save up a rainy day fund.

1. 3. Debt consolidation: Transferring high-cost consumer debt like a credit card balance to a lower interest rate by consolidating it into your mortgage can help you boost your cash flow to build up savings or pay down your debt faster.

1. 4. Securing a Home Equity Line of Credit (HELOC): A HELOC can help you access lower-cost funds for investing, such as topping up your RRSP or TFSA contribution for the year. It can also help you pay for home improvement projects, so you can take advantage of the federal Home Renovation Tax Credit for eligible projects done before February 1, 2010.

1. 5. Improving credit: A mortgage professional can coach you on how to improve your credit score, which can help you work toward future goals such as buying a vacation property for your family.

In some cases, a mortgage check-up may show that refinancing could improve your mortgage strategy.  However, most mortgages require the borrower to pay a penalty if they pay off their mortgage in full before the maturity date.  A mortgage professional can provide advice on what penalties you may incur and if refinancing is indeed your best option.

“In the end, a yearly mortgage check-up could reveal that the best course of action is no change at all,” states Elfie.  Mortgage professionals can be excellent resources to help homeowners better understand their financing options, whether they’re buying a new home or staying put.”

For your own Mortgage Check-up, apply on-line on the site today!

Mortgage Intelligence is a leading mortgage brokerage firm with a national team of mortgage professionals.  At Mortgage Intelligence our mortgage experts provide unbiased mortgage advice to first time homebuyers as well as those looking to renew or refinance their mortgage, or consolidate debt