New mortgage rules start January 1, 2018. Unfortunately, this might affect your ability to use your home equity to consolidate your high-interest debt into a new or existing mortgage. This is a great option if you are in need of extra cash flow, want to pay down your debt faster, and save potentially thousands of dollars in interest. That’s why you should act now if you want to realize these benefits.
Consider the following example, in which existing mortgage, car loan, and credit cards total $225,000. Roll all that debt into a new $233,000 mortgage (including a fee to break the existing mortgage) and just look at the payoff:
Total Debt Current New
Mortgage $175,000 $873 $1,162
Car Loan $25,000 $517 $0
All credit cards $25,000 $650 $0
(*Assumes 3.5% 5-year, 25 yr term. Credit cards 19.9% and car loan 9%, both 5 yr am. OAC. Subject to Change. For illustration purposes only.)
If you put $500 of your monthly savings back into your mortgage payment, you’ll reduce your amortization from 25 years to 15. Or you could invest in RRSPs or RESPs and reap some tax benefits. The choice is yours.
To find out how you can lower your debt, boost your monthly cash flow and be mortgage-free quicker, before the new rules come into effect, contact us today!
|Household Income||Purchasing Power TODAY||Purchasing Power JAN 1, 2018|
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Rasha Ingratta & Mortgage Associates
By Mortgage Intelligence
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